UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



FORM 10-K



| | x | Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
| | - | ------------------------------------------------------------------------------------



For the Year Ended December 31, 2013



| |  ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
| | - | ----------------------------------------------------------------------------------------



Commission File Number: 814-00897



SPECIAL VALUE CONTINUATION PARTNERS,
LP

(Exact Name of Registrant
as Specified in Charter)



|Delaware                                               |  | 68-0631675                               
|------------------------------------------------------ |  | -----------------------------------------
|(State or Other Jurisdiction
        of Incorporation) |  | (IRS Employer
        Identification No.)



|2951 28th Street, Suite 1000
        Santa Monica, California |  | 90405     
|------------------------------------------------------------- |  | ----------
|(Address of Principal Executive Offices)                      |  | (Zip Code)



Registrant’s telephone number, including
area code (310) 566-1000



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



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



Common Limited Partner Interests

(Title of class)



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days: YesxNo ̈



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes ̈No ̈



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and
large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



|Large accelerated filer ̈ |  | Accelerated filer ̈        
|------------------------ |  | --------------------------
|                         |  |                           
|Non-accelerated filerx   |  | Smaller Reporting company ̈



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ̈Nox



The number of the Registrant’s common
limited partner interests, outstanding as of December 31, 2013 was 551,095,042.



Documents Incorporated by Reference: Portions
of the Registrant’s Proxy Statement relating to the Registrant’s 2014 Annual Meeting of Stockholders to be filed not
later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K are incorporated by reference into
Part III of this Report.











Table of Contents



SPECIAL VALUE CONTINUATION PARTNERS,
LP



FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2013



TABLE OF CONTENTS



|        |                                                                                                              |  | Page
|------- | ------------------------------------------------------------------------------------------------------------ |  | ----
|        |                                                                                                              |  |     
|        | PART I                                                                                                       |  |     
|Item 1. | Business                                                                                                     |  | 2   
|        |                                                                                                              |  |     
|Item1A. | Risk Factors                                                                                                 |  | 18  
|        |                                                                                                              |  |     
|Item1B. | Unresolved Staff Comments                                                                                    |  | 33  
|        |                                                                                                              |  |     
|Item 2. | Properties                                                                                                   |  | 33  
|        |                                                                                                              |  |     
|Item 3. | Legal Proceedings                                                                                            |  | 33  
|Item 4. | Mine Safety Disclosures                                                                                      |  | 33  
|        |                                                                                                              |  |     
|        | PART II                                                                                                      |  |     
|Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 34  
|Item 6. | Selected Financial Data                                                                                      |  | 34  
|Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        |  | 35  
|Item7A. | Quantitative and Qualitative Disclosures about Market Risk                                                   |  | 47  
|Item 8. | Financial Statements and Supplementary Data                                                                  |  | 48  
|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |  | 86  
|Item9A. | Controls and Procedures                                                                                      |  | 86  
|Item9B. | Other Information                                                                                            |  | 86  
|        |                                                                                                              |  |     
|        | PART III                                                                                                     |  |     
|Item10. | Directors, Executive Officers and Corporate Governance                                                       |  | 87  
|        |                                                                                                              |  |     
|Item11. | Executive Compensation                                                                                       |  | 87  
|Item12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 87  
|        |                                                                                                              |  |     
|Item13. | Certain Relationships and Related Transactions, and Director Independence                                    |  | 87  
|Item14. | Principal Accountant Fees and Services                                                                       |  | 87  
|        |                                                                                                              |  |     
|        | PART IV                                                                                                      |  |     
|Item15. | Exhibits and Financial Statement Schedules                                                                   |  | 88  
|        |                                                                                                              |  |     
|        | Signatures                                                                                                   |  | 90  





1







Part I



In this annual report in Form 10-K, except
as otherwise indicated, the terms:



“Partnership,” “we,”
“us” and “our” refer to Special Value Continuation Partners, LP, a Delaware limited partnership;



“TCPC” refers to Special
Value Continuation Fund, LLC, a Delaware limited liability company, for the periods prior to the consummation of the Conversion
described elsewhere in this report and to TCP Capital Corp. for the periods after the consummation of the Conversion;



“TCPC
Funding” refers to TCPC Funding I LLC, a Delaware limited liability company;



The “Advisor” refers to Tennenbaum
Capital Partners, LLC, a Delaware limited liability company and the investment manager; and



“General Partner” and “Administrator”
refer to SVOF/MM, LLC, a Delaware limited liability company, the general partner of the Partnership and an affiliate of the Advisor
and administrator of TCPC and the Partnership.



Item 1. Business



The Partnership is a Delaware limited
partnership formed on July 31, 2006 and is an externally managed, closed-end, non-diversified management investment company.
On April 2, 2012, we elected to be treated as a business development company (“BDC”) under the Investment Company
Act of 1940, as amended (the “1940 Act”) (the “Conversion”). Our investment objective is to achieve
high total returns through current income and capital appreciation, with an emphasis on principal protection. We seek to
achieve our investment objective primarily through investments in debt securities of middle-market companies, which we
typically define as those with enterprise values between $100 million and $1.5 billion. While we intend to primarily focus on
privately negotiated investments in debt of middle-market companies, we may make investments of all kinds and at all levels
of the capital structure, including in equity interests such as preferred or common stock and warrants or options received in
connection with our debt investments. Our investment activities will benefit from what we believe are the competitive
advantages of our Advisor, including its diverse in-house skills, proprietary deal flow, and consistent and rigorous
investment process focused on established, middle-market companies. We expect to generate returns through a combination of
the receipt of contractual interest payments on debt investments and origination and similar fees, and, to a lesser extent,
equity appreciation through options, warrants, conversion rights or direct equity investments.



Investment operations are conducted in the
Partnership, either directly or in the Partnership’s wholly owned subsidiary, TCPC Funding I, LLC (“TCPC Funding”). 
TCP Capital Corp. (“TCPC”) owns 100% of the common limited partner interests of the Partnership. TCPC has also elected
to be treated as a BDC under the 1940 Act. The General Partner of the Partnership is SVOF/MM, LLC (“SVOF/MM”), which
also serves as the administrator (the “Administrator”) of TCPC and the Partnership. The managing member of SVOF/MM
is Tennenbaum Capital Partners, LLC (the “Advisor”), which serves as the investment manager to both TCPC and the Partnership.
Most of the equity interests in the General Partner are owned directly or indirectly by the Advisor and its employees.



Tennenbaum Capital Partners, LLC



Our investment activities are managed
by the Advisor. The Advisor is a leading investment manager (including specialty lending to middle-market companies). The
Advisor is a Delaware limited liability company and is registered as an investment advisor under the Investment Advisers Act
of 1940. As of December 31, 2013, the Advisor had in excess of $5.0 billion in committed capital under management,
approximately 18% of which consists of TCPC’s committed capital, and a team of over 70 people including investment
professionals and other personnel that focus on operations, finance, legal, and compliance, accounting and reporting,
investor relations, information technology, and administration. The Advisor was founded in 1999 by Michael E. Tennenbaum,
Mark K. Holdsworth and Howard M. Levkowitz, and its predecessor entity, formed by the same individuals, commenced operations
in 1996. The three founders along with David Adler, David A. Hollander, Michael E. Leitner, Philip M. Tseng, Rajneesh Vig,
and Lee Landrum constitute the Advisor’s active partners (the “Advisor Partners”). The Advisor Partners
have significant industry experience, including experience investing in middle-market companies. Together, the Advisor
Partners have invested over $13.1 billion in more than 325 companies since the Advisor’s inception, through multiple
business and credit cycles, across all segments of the capital structure and through a broad set of credit-oriented
strategies including leveraged loan origination, secondary investments of discounted debt securities, and distressed and
control opportunities. We believe the Advisor Partners’ investment perspectives, complementary skills, and collective
investment experience provide the Advisor with a strategic and competitive advantage in middle-market investing.



2









As our investment advisor, the Advisor is
responsible for sourcing potential investments, conducting research, analyzing investment opportunities and structuring our investments
and monitoring our portfolio companies on an ongoing basis. We believe that the Advisor has a proven long-term track record of
positive performance, notwithstanding some periods during which losses were incurred, of sourcing deals, originating loans and
successfully investing in middle-market companies and that the relationships of its investment professionals are integral to the
Advisor’s success. The Advisor’s investment professionals have long-term working relationships with key sources of
investment opportunities and industry expertise, including investment bankers, financial advisors, attorneys, private equity sponsors,
other senior lenders, high-yield bond specialists, research analysts, accountants, and senior management teams. Additionally, the
Advisor’s structure includes both a board of advisors and a group of Senior Executive Advisors, a team comprised of approximately
17 current and former executives from a variety of industries, which extends the reach of the Advisor’s relationships through
a group of seasoned industry leaders and that can enhance our deal sourcing and due diligence activities.



We also benefit from the existing infrastructure
and administrative capabilities of an established investment manager. The General Partner, an affiliate of the Advisor, serves
as our Administrator and provides us with office space, equipment and office services. The tasks of our Administrator include overseeing
our financial records, preparing reports to our common limited partner and reports filed with the SEC and generally monitoring
the payment of our expenses and the performance of administrative and professional services rendered to us by others.



Since the beginning of 2011, the Advisor
executed across its funds over $2 billion in direct origination leveraged loans primarily to middle-market companies, of which
over $739 million was for our account. There can be no assurance that similar deal flow or terms will be available in the future
for loans in which we may invest.



Operating and Regulatory Tax Structure



The Partnership has elected to be treated
as a partnership for U.S. federal income tax purposes. TCPC and the Partnership have elected to be treated as BDCs under the 1940
Act. As a BDC we are required to invest at least 70% of our total assets primarily in securities of private and certain public
U.S. companies (other than investment companies and certain financial institutions), cash, cash equivalents, U.S. Government securities,
and other high-quality debt investments that mature in one year or less and to comply with other regulatory requirements, including
limitations on our use of debt. Because TCPC and the Partnership are each BDCs, their assets, liabilities and results of operations
will be consolidated for purposes of this 70% requirement.



Investment Strategy



To achieve our investment objectives, we
intend to focus on a subset of the broader investment strategies historically pursued by the Advisor. Our primary investment focus
is the ongoing origination of and investments in leveraged loans of performing middle-market companies, building on the Advisor’s
established track record of origination and participation in the original syndication of approximately $5.4 billion of leveraged
loans to 137 companies since 1999, of which we invested over $1.2 billion in 84 companies. For the purposes of this filing, the
term “leveraged loans” refers to senior debt investments that rank ahead of subordinated debt and that generally have
the benefit of security interests in the assets of the borrower. Our investments generally range from $10 million to $40 million
per company, the size of which may grow over time in proportion with our capital base. We expect to generate current returns through
a combination of the receipt of contractual interest payments on debt investments and origination and similar fees, and, to a lesser
extent, equity appreciation through options, warrants, conversion rights or direct equity investments. We often receive equity
interests such as preferred or common stock and warrants or options in connection with our debt investments. From time to time
we may also use other investment strategies, which are not our primary focus, to attempt to enhance the overall return of our portfolio.
These investment strategies may include, but are not limited to, the purchase of discounted debt, opportunistic investments, and
financial instruments to hedge currency or interest rate risk associated with our portfolio.



Our typical investments are in performing
middle-market companies. We believe that middle-market companies are generally less able to secure financing than larger companies
and thus offer better return opportunities for those able to conduct the necessary diligence to appropriately evaluate these companies.
We focus primarily on U.S. companies where we believe our Advisor’s perspective, complementary skills and investment experience
provides us with a competitive advantage and in industries where our Advisor sees an attractive risk reward profile due to macroeconomic
trends and existing Advisor industry expertise.



Investment Portfolio



At December 31, 2013, our investment portfolio
of $766.3 million (at fair value) consisted of 67 portfolio companies and was invested 95% in debt investments, of which 98%
was in senior secured debt and 2% in unsecured or subordinated debt. In aggregate, our investment portfolio was invested 76% in
senior secured loans, 17% in senior secured notes, 2% in unsecured or subordinated debt, and 5% in equity investments. Our average
portfolio company investment at fair value was approximately $11.4 million. Our largest portfolio company investment by value
was approximately $21.3 million and our five largest portfolio company investments by value comprised approximately 13% of
our portfolio at December 31, 2013.



3









The following charts summarize our portfolio
mix by industry and type based on the fair value of our investments as of December 31, 2013.



|Investment by Industry | Investment by Asset Type
|---------------------- | ------------------------







Investment Process



The Advisor’s investment process is
designed to maximize its strategic advantages: a strong brand name as a specialty lender to the middle-market and diverse in-house
expertise and skills. The Advisor seeks out opportunities by conducting a rigorous and disciplined investment process that combines
the following characteristics:



Deal Sourcing



As a leading middle-market corporate debt
investment manager with a 15-year history and in excess of $5.0 billion in committed capital as of December 31, 2013, approximately
18% of which consists of TCPC’s committed capital, the Advisor is active in new deal financing opportunities in the middle-market
segment. However, we believe that the Advisor’s real deal flow advantage comes from the proprietary network of established
relationships of its investment professionals and synergies among its professionals and portfolio companies. Members of the Advisor’s
Investment Committee for the Partnership ( the “Investment Committee”) have long-term relationships with deal sources
including investment bankers, restructuring professionals, bankruptcy attorneys, senior lenders, high yield bond specialists, research
analysts, accountants, fund management teams, the Advisor’s Advisory Board, Senior Executive Advisors, board members of former
clients, former colleagues and other operating professionals to facilitate deal flow. The Investment Committee is currently comprised
of five voting members. In total, the Investment Committee consists of approximately 30 members from the Advisor. The number of
voting and non-voting members of the Investment Committee is subject to increase or decrease in the sole discretion of the Advisor.
All members of the Investment Committee attend investment meetings and are encouraged to participate in discussions. In addition,
members of the Investment Committee have relationships with other investors, including insurance companies, bond funds, mezzanine
funds, private equity funds, hedge funds and other funds which invest in similar assets. Further, the Advisor regularly calls on
both active and recently retired senior executives from the relevant industries to assist with the due diligence of potential investments.
Historically, these relationships with retired senior executives have also been a valuable source of transactions and information.
The Advisor anticipates that they will continue to provide future opportunities. We believe the Advisor’s strong relationships
with its portfolio companies facilitate positive word-of-mouth recommendations to other companies seeking the Advisor’s expertise.
The Advisor’s relationships often result in the ability to access investment opportunities earlier than many of its competitors
and in some cases on an exclusive basis.



4







Due Diligence Process



The foundation of the Advisor’s investment
process is intensive investment research and analysis by its experienced staff of investment professionals. The Advisor’s
senior professionals have worked together for numerous years and we believe that they have a superior level of credit investing
knowledge relative to other credit investors. The Advisor supplements its in-house knowledge with industry experts, including CEO/CFO-level
executives, with direct management experience in the industries under consideration. The Advisor prefers these industry experts
to consultants because of the practical business advice that comes from having managed businesses. The Advisor rigorously and comprehensively
analyzes issuers of securities of interest. The process includes a quantitative and qualitative assessment of the issuer’s
business, an evaluation of its management, an analysis of the business strategy and industry trends, and an in-depth examination
of the company’s capital structure, financial results and projections. The Advisor’s due diligence process includes:



| | · | an assessment of the outlook for the industry and general macroeconomic
trends;
| | - | -------------------------------------------------------------------------------



| | · | discussions with issuer management and other industry executives,
including the assessment of management/board strengths and weaknesses;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| | · | an analysis of the fundamental asset values and the enterprise value
of the issuer;
| | - | -----------------------------------------------------------------------------------



| | · | review of the issuer’s key assets, core competencies, competitive
advantages, historical and projected financial statements, capitalization, financial flexibility, debt amortization requirements,
and tax, environmental, legal and regulatory contingencies;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | review of the issuer’s existing credit documents, including
credit agreements, indentures, intercreditor agreements, and security agreements; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| | · | review of documents governing the issuer, including charter, by-laws, and key contracts.
| | - | ----------------------------------------------------------------------------------------



Structuring Originations



As an early non-bank participant in the
leveraged loan market, we believe that loan origination is a core competency of the Advisor. Supplementing industry deal teams’
experience and competency, the Advisor has six professionals (including investment professionals) with legal experience, two of
whom have a quarter-century each of relevant experience in secured credit. Deal teams work with the Advisor’s in-house legal
specialists and outside counsel to structure over-collateralized loans with what we believe to be strong creditor protections and
contractual controls over borrower operations. In many cases, the Advisor works to obtain contractual governance rights and board
seats to protect principal and maximize post-investment returns. Deals usually include original issue discounts, upfront fees and/or
equity participations through warrants or direct equity stakes.



Trading and Secondary Market Purchases



A key element in maximizing investment returns
in secondary purchases is buying and selling investments at the best available prices. The Advisor has a dedicated trading staff
for both the highly specialized traded loan market and for high-yield bonds. Through its trading operations, the Advisor maintains
its established relationships with a network of broker-dealers in the debt securities markets. These relationships provide the
Advisor with access to the trading dynamics of existing or potential investments and assist it in effectively executing transactions.
These relationships may also lead to the early identification of potential investment opportunities for the Partnership.



Portfolio Management & Monitoring



The Advisor actively monitors the financial
performance of its portfolio companies and market developments. This constant monitoring permits the Advisor to update position
risk assessments, seek to address potential problems early, refine exit plans, and make follow-on investment decisions quickly.
We view active portfolio monitoring as a vital part of our investment process.



We consider board observation and information
rights, regular dialogue with company management and sponsors, and detailed internally generated monitoring reports to be critical
to our performance. We have developed a monitoring template that seeks to ensure compliance with these standards and that is used
as a tool by the Investment Committee to assess investment performance relative to plan.



5







| | · | Deal teams maintain contact with portfolio company management through
regularly scheduled and ad hoc conference calls and onsite visits.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                         

| | · | Deal teams review portfolio company progress relative to plan and
pre-determined performance benchmarks.
| | - | --------------------------------------------------------------------------------------------------------
| |   |                                                                                                         

| | · | Adverse or unexpected developments, as well as consequential routine
updates, are reported to the Investment Committee and thoroughly discussed at regularly scheduled weekly meetings. If merited,
the Investment Committee will hold ad hoc meetings as necessary to address urgent issues.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                              

| | · | Deal teams, with Investment Committee approval, encourage portfolio
company managers to catalyze events to monetize holdings for greater return, or where needed, take corrective actions to address
shortfalls to plan or benchmarks.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                       

| | · | All existing portfolio holdings are formally reviewed in detail by
the entire Investment Committee once per quarter at the Advisor’s quarterly portfolio review.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



Investment Committee and Decision Process



The Advisor’s investment process is
organized around the Investment Committee that provides for a centralized, repeatable decision process. The Investment Committee
meets weekly and, with respect to each fund the Advisor advises, certain members of the Investment Committee are voting members.
The voting members of the Investment Committee for the Company are currently Mark K. Holdsworth, Michael E. Leitner, Howard M.
Levkowitz, Philip M. Tseng and Rajneesh Vig. Approval by a simple majority vote of the voting members of the Investment Committee
for each respective fund is required for the purchase or sale of any investment, with certain de-minimis exceptions. No voting
member has veto power. The Advisor’s investment process is designed to maximize risk-adjusted returns and preserve downside
protection.



Regulation



We have filed an election to be regulated
as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their
affiliates (including any investment advisors or co-advisors), principal underwriters and affiliates of those affiliates or underwriters
and requires that a majority of the directors be persons other than “interested persons,” as that term is defined in
the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to
withdraw our election as, a BDC unless approved by “a majority of our outstanding voting securities”, which is defined
in the 1940 Act as the lesser of a majority of the outstanding voting securities or 67% or more of the securities voting if a quorum
of a majority of the outstanding voting securities is present.



We may invest up to 100% of our assets in securities acquired
directly from issuers in privately negotiated transactions. With respect to such securities, we may, for the purpose of public
resale, be deemed an “underwriter” as that term is defined in the Securities Act of 1933, or the Securities Act. We
do not intend to acquire securities issued by any investment company that exceed the limits imposed by the 1940 Act. Under these
limits, except for registered money market funds we generally cannot acquire more than 3% of the voting stock of any investment
company, invest more than 5% of the value of our total assets in the securities of one investment company or invest more than 10%
of the value of our total assets in the securities of more than one investment company. With regard to that portion of our portfolio
invested in securities issued by investment companies, it should be noted that such investments might indirectly subject our common
limited partner to additional expenses as they will indirectly be responsible for the costs and expenses of such companies. None
of our investment policies are fundamental and any may be changed without common limited partner approval.



Qualifying assets



Under the 1940 Act, a BDC may not acquire
any asset other than assets of the type listed in section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless,
at the time the acquisition is made, qualifying assets represent at least 70% of the Partnership’s total assets. The principal
categories of qualifying assets relevant to our proposed business are the following:



| | · | Securities purchased in transactions not involving any public offering
from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company, or from
any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any
other person, subject to such rules as may be prescribed by the SEC. An eligible portfolio company is defined in the 1940 Act as
any issuer which:
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6







| | · | is organized under the laws of, and has its principal place of business
in, the United States;
| | - | ----------------------------------------------------------------------------------------------



| | · | is not an investment company (other than a small business investment
company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act;
and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | satisfies either of the following:
| | - | ----------------------------------



| | · | has a market capitalization of less than $250 million or does not
have any class of securities listed on a national securities exchange; or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



| | · | is controlled by a BDC or a group of companies including a BDC, the
BDC actually exercises a controlling influence over the management or policies of the eligible portfolio company, and, as a result
thereof, the BDC has an affiliated person who is a director of the eligible portfolio company.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Securities of any eligible portfolio company which we control.
| | - | --------------------------------------------------------------



| | · | Securities purchased in a private transaction from a U.S. issuer that
is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is
in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to
meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Securities of an eligible portfolio company purchased from any person
in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the
eligible portfolio company.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Securities received in exchange for or distributed on or with respect
to securities described above, or pursuant to the exercise of warrants or rights relating to such securities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Cash, cash equivalents, U.S. Government securities or high-quality
debt securities maturing in one year or less from the time of investment.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



Managerial assistance to portfolio companies



A BDC must have been organized and have
its principal place of business in the United States and must be operated for the purpose of making investments in the types of
securities described in “Qualifying assets” above. However, in order to count portfolio securities as qualifying assets
for the purpose of the 70% test, the BDC must either control the issuer of the securities or must offer to make available to the
issuer of the securities significant managerial assistance. Where the BDC purchases such securities in conjunction with one or
more other persons acting together, the BDC will satisfy this test if one of the other persons in the group makes available such
managerial assistance, although reliance on other investors may not be the sole method by which the BDC satisfies the requirement
to make available managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby
the BDC, through its investment manager, directors, officers or employees, offers to provide, and, if accepted, does so provide,
significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.



7







Small Business Administration Regulations



We have filed an application for
a wholly owned subsidiary to be licensed by the Small Business Administration (the “SBA”) as a small
business investment company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958. The SBA has accepted our application, making us eligible to make pre-approved
investments. If our application to the SBIC program is ultimately approved, we will be able to borrow funds from the SBA against
eligible investments. The
Small Business Investment Company regulations currently limit the amount that is available to borrow by any SBIC
to $150 million. There is no assurance that our application will be approved or that, if approved, we will draw up to
the maximum limit available under the Small Business Investment Company program.



Small business investment companies are designed to stimulate
the flow of private equity capital to eligible small businesses. Under present Small Business Administration regulations, eligible
small businesses include businesses that have a tangible net worth not exceeding $18 million and have average annual fully taxed
net income not exceeding $6 million for the two most recent fiscal years. In addition, a small business investment company must
devote 25% of its investment activity to “smaller” concerns as defined by the Small Business Administration. A smaller
concern is one that has a tangible net worth not exceeding $6 million and has average annual fully taxed net income not exceeding
$2 million for the two most recent fiscal years. Small Business Administration regulations also provide alternative size standard
criteria to determine eligibility, which depend on the industry in which the business is engaged and are based on such factors
as the number of employees and gross sales. According to Small Business Administration regulations, small business investment companies
may make long-term loans to small businesses, invest in the equity securities of such businesses and provide them with consulting
and advisory services. We plan to provide long-term loans to qualifying small businesses, and in connection therewith, make equity
investments.



If we receive a small business investment company license, we
will be periodically examined and audited by the Small Business Administration’s staff to determine its compliance with small
business investment company regulations.



Taxation of the company



We have elected to be taxed as a partnership
for U.S. federal income tax purposes. The Partnership’s income or loss is reported in the partner’s income tax
returns. Consequently, no income taxes are paid at the Partnership level or reflected in the Partnership’s financial statements.



Investment Structure



Once we determine that a prospective portfolio
company is suitable for a direct investment, we work with the management of that company and its other capital providers, including
senior and junior lenders, and equity holders, to structure an investment. We negotiate among these parties to agree on how our
investment is expected to be structured relative to the other capital in the portfolio company’s capital structure.



Leveraged Loans



We structure our investments primarily as
secured leveraged loans. Leveraged loans are generally senior debt instruments that rank ahead of subordinated debt of the portfolio
company. Leveraged loans generally have the benefit of security interests on the assets of the portfolio company, which may rank
ahead of, or be junior to, other security interests.



High-Yield Securities



The Partnership’s portfolio currently
includes high-yield securities and the Partnership may invest in high-yield securities in the future. High-yield securities have
historically experienced greater default rates than has been the case for investment grade securities and are generally rated below
investment grade by one or more nationally recognized statistical rating organizations or will be unrated but of comparable credit
quality to obligations rated below investment grade, and have greater credit and liquidity risk than more highly rated obligations.
High-yield securities are generally unsecured and may be subordinate to other obligations of the obligor and are often issued in
connection with leveraged acquisitions or recapitalizations in which the issuers incur a substantially higher amount of indebtedness
than the level at which they had previously operated. The Partnership’s portfolio also includes mezzanine investments which
are generally unsecured and rated below investment grade. Mezzanine investments of the type in which the Partnership invests in
are primarily privately negotiated subordinated debt securities often issued in connection with leveraged transactions, such as
management buyouts, acquisitions, re-financings, recapitalizations and later stage growth capital financings, and are generally
accompanied by related equity participation features such as options, warrants, preferred and common stock. In some cases, our
debt investments may provide for a portion of the interest payable to be paid-in-kind interest. To the extent interest is paid-in-kind,
it will be payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding
aggregate principal amount of such obligation.



8







Warrants, Options and Minority Equity



In some cases, we will also receive nominally
priced warrants or options to buy a minority equity interest in the portfolio company in connection with a loan. As a result, if
a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We may structure
such warrants to include provisions protecting our rights as a minority-interest holder, as well as a “put,” or right
to sell such securities back to the issuer, upon the occurrence of specified events. In many cases, we may also seek to obtain
registration rights in connection with these equity interests, which may include demand and “piggyback” registration
rights.



Distressed Debt



The Partnership’s portfolio currently
includes distressed debt investments and the Partnership is authorized to continue to invest in the securities and other obligations
of distressed and bankrupt issuers, including debt obligations that are in covenant or payment default. As of December 31, 2013,
none of the Partnership’s debt investments were in non-accrual status. The Partnership does not anticipate distressed debt
to be a significant part of its ongoing investment strategy. Such investments generally trade significantly below par and are considered
speculative. The repayment of defaulted obligations is subject to significant uncertainties. Defaulted obligations might be repaid
only after lengthy workout or bankruptcy proceedings, during which the issuer might not make any interest or other payments. Typically
such workout or bankruptcy proceedings result in only partial recovery of cash payments or an exchange of the defaulted obligation
for other debt or equity securities of the issuer or its affiliates, which may in turn be illiquid or speculative.



Opportunistic Investments



Opportunistic investments may include, but
are not limited to, investments in debt securities of all kinds and at all levels of the capital structure and may include equity
securities of public companies that are thinly traded, emerging market debt, structured finance vehicles such as CLO funds and
debt of middle-market companies located outside the United States. We do not intend such investments to be our primary focus.



We tailor the terms of each investment to
the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that protects our
rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its operating
results. We seek to limit the downside potential of our investments by:



| | · | requiring a total return on our investments (including both interest
and potential equity appreciation) that we believe will compensate us appropriately for credit risk;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | negotiating covenants in connection with our investments that afford
our portfolio companies as much flexibility in managing their businesses as possible, consistent with the preservation of our capital.
Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control provisions
and board rights, including either observation or rights to a seat on the board of directors under some circumstances; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | selecting investments that we believe have a very low probability
of loss.
| | - | --------------------------------------------------------------------------



We expect to hold most of our investments
to maturity or repayment, but we may sell some of our investments earlier if a liquidity event occurs, such as a sale, recapitalization
or worsening of the credit quality of the portfolio company.



Code of Ethics



We and the Advisor have each adopted a
code of ethics pursuant to Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers
Act”), respectively, that establishes procedures for personal investments and restricts certain transactions by our personnel.
Our codes of ethics generally do not permit investments by our employees in securities that may be purchased or held by us. You
may read and copy these codes of ethics at the SEC’s Public Reference Room in Washington, D.C. You may obtain information
on the operation of the Public Reference Room by calling the SEC at 1 (800) SEC-0330. In addition, each code of ethics is available
on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You may also access the codes of ethics by going
to our website at http://investors.tcpcapital.com/.



9









Compliance Policies and Procedures



We and the Advisor have adopted and implemented
written policies and procedures reasonably designed to detect and prevent violation of the federal securities laws. We are required
to review these compliance policies and procedures annually for their adequacy and the effectiveness of their implementation and
to designate a chief compliance officer to be responsible for their administration. Elizabeth Greenwood currently serves as our
chief compliance officer.



Proxy Voting Policies and Procedures



We have delegated our proxy voting responsibility
to our investment adviser. A summary of the Proxy Voting Policies and Procedures of the Advisor are set forth below. The guidelines
are reviewed periodically by the adviser and our non-interested directors, and, accordingly, are subject to change.



The Advisor is registered under the Investment
Advisers Act of 1940 and has a fiduciary duty to act solely in the best interests of its clients. As part of this duty, it recognizes
that it must vote securities held by its clients in a timely manner free of conflicts of interest. These policies and procedures
for voting proxies for investment advisory clients are intended to comply with Section 206 of, and Rule 206(4)-6 under, the Advisers
Act.



Our investment adviser votes proxies relating
to our portfolio securities in the best interest of the common limited partner. The Advisor reviews on a case-by-case basis each
proposal submitted for a proxy vote to determine its impact on our investments. Although it generally votes against proposals that
may have a negative impact on our investments, it may vote for such a proposal if there exists compelling long-term reasons to
do so.



The proxy voting decisions of the Advisor
are made by the senior officers who are responsible for monitoring each of our investments. To ensure that our vote is not the
product of a conflict of interest, it requires that: (i) anyone involved in the decision making process disclose to the managing
member any potential conflict that he or she is aware of and any contact that he or she has had with any interested party regarding
a proxy vote; and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how
we intend to vote on a proposal in order to reduce any attempted influence from interested parties.



You may obtain information about how we
voted proxies by making a written request for proxy voting information to: Tennenbaum Capital Partners, LLC, 2951 28th
Street, Suite 1000, Santa Monica, CA 90405, Attention: Investor Relations.



Privacy Principles



We are committed to maintaining the privacy
of our limited partners and to safeguarding their non-public personal information. The following information is provided to help
you understand what personal information we collect, how we protect that information and why, in certain cases, we may share information
with select other parties.



Generally, we do not receive any non-public
personal information relating to our limited partners, although certain non-public personal information of our limited partners
may become available to us. We do not disclose any non-public personal information about our limited partners or former limited
partners to anyone, except as permitted by law or as is necessary in order to service limited partners’ accounts (for example,
to a transfer agent or third-party administrator).



We restrict access to non-public personal
information about our limited partners to employees of the Advisor and its affiliates with a legitimate business need for the information.
We maintain physical, electronic and procedural safeguards designed to protect the non-public personal information of our limited
partners.



Investment Management Agreements



The Partnership and TCPC have entered into
separate but substantially identical investment management agreements with the Advisor, under which the Advisor, subject to the
overall supervision of our respective boards of directors, manages the day-to-day operations and provides investment advisory services
to the Partnership and TCPC. In addition, pursuant to the Amended and Restated Limited Partnership Agreement, the General Partner
directs and executes the day-to-day operational activities of the Partnership. For providing these services, the Advisor receives
a base management fee and, in addition, the Advisor or the General Partner may receive incentive compensation.



10







The base management fee is currently paid
by the Partnership to the Advisor and the incentive compensation, if any, is paid by the Partnership to the General Partner or
the Advisor. If the Partnership is terminated or for any other reasons incentive compensation is not paid by the Partnership, such
amounts will be paid directly by TCPC to the Advisor pursuant to its investment management agreement with the Advisor.



Under the terms of our investment management
agreements, the Advisor:



| | · | determines the composition of our portfolio, the nature and timing
of the changes to our portfolio and the manner of implementing such changes;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | · | identifies, evaluates and negotiates the structure of the investments
we make (including performing due diligence on our prospective portfolio companies); and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | closes, monitors and administers the investments we make, including
the exercise of any voting or consent rights.
| | - | -----------------------------------------------------------------------------------------------------------------



The Advisor’s services under the investment
management agreements are not exclusive, and it is free to furnish similar services to other entities so long as its services to
us are not impaired.



Pursuant to our investment management agreements,
we pay the Advisor compensation for investment advisory and management services consisting of base management compensation and
a two-part incentive compensation.



Management Fee. The base management
fee is calculated at an annual rate of 1.5% of TCPC’s total assets (excluding cash and cash equivalents) payable quarterly
in arrears. For purposes of calculating the base management fee, “total assets” is determined without deduction for
any borrowings or other liabilities. The base management fee is calculated based on the value of our total assets (excluding cash
and cash equivalents) at the end of the most recently completed calendar quarter. The base management fee for any partial quarter
is appropriately pro-rated.



Incentive Compensation. We also pay
incentive compensation to the Advisor or the General Partner. Under the investment management agreements and the Amended and Restated
Limited Partnership Agreement, no incentive compensation was incurred until after January 1, 2013.



Beginning January 1, 2013, the incentive
compensation equals the sum of (1) 20% of all ordinary income since that date and (2) 20% of all net realized capital gains (net
of any net unrealized capital depreciation) since that date, with each component being subject to a total return requirement of
8% of contributed common equity of TCPC annually. The incentive compensation initially is an equity allocation to the General Partner
under the Amended and Restated Limited Partnership Agreement. If the Partnership is terminated or for any other reasons incentive
compensation is not distributed by the Partnership, it would be paid pursuant to the investment management agreement between TCPC
and the Advisor.



The incentive compensation has two components,
ordinary income and capital gains. Each component is payable or distributable quarterly in arrears (or upon termination of the
Advisor as the investment manager or the General Partner as the general partner of the Partnership, as of the termination date)
beginning January 1, 2013 and calculated as follows:



Each of the two components of incentive
compensation is separately subject to a total return limitation. Thus, notwithstanding the following provisions, we are not be
obligated to pay or distribute any ordinary income incentive compensation or any capital gains incentive compensation if our cumulative
total return does not exceed an 8% annual return on daily weighted average contributed common equity of TCPC. If the cumulative
annual total return of TCPC is above 8%, the total cumulative incentive compensation we pay will not be more than 20% of TCPC’s
cumulative total return, or, if lower, the amount of TCPC’s total return that exceeds the 8% annual rate.



Subject to the above limitation, the ordinary
income component is the amount, if positive, equal to 20% of the cumulative ordinary income before incentive compensation, less
cumulative ordinary income incentive compensation previously paid or distributed.



Subject to the above limitation, the capital
gains component is the amount, if positive, equal to 20% of the cumulative realized capital gains (computed net of cumulative realized
losses and cumulative net unrealized capital depreciation), less cumulative capital gains incentive compensation previously paid
or distributed. For assets held on January 1, 2013, capital gain, loss and depreciation are measured on an asset by asset basis
against the value as of December 31, 2012. The capital gains component is paid or distributed in full prior to payment or distribution
of the ordinary income component.



11







For purposes of the foregoing computations
and the total return limitation, the following definitions apply:



| | · | “cumulative” means amounts for the period commencing January
1, 2013 and ending as of the applicable calculation date.
| | - | ----------------------------------------------------------------------------------------------------------------------



| | · | “contributed common equity” means the value of net assets
attributable to TCPC’s common stock as of December 31, 2012 plus the proceeds to us of all issuances of common stock less
(A) offering costs of any of our securities or leverage facilities, (B) all distributions by us representing a return of capital
and (C) the total cost of all repurchases of our common stock by us, in each case after December 31, 2012 and through the end of
the preceding calendar quarter in question, in each case as determined on an accrual and consolidated basis.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “ordinary income before incentive compensation” means
our interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring,
diligence, managerial assistance and consulting fees or other fees that we receive from portfolio companies) during the period,
(i) minus our operating expenses during the period (including the base management fee, expenses payable under the administration
agreement, any interest expense and any dividends paid on any issued and outstanding preferred stock), (ii) plus increases and
minus decreases in net assets not treated as components of income, operating expense, gain, loss, appreciation or depreciation
and not treated as contributions or distributions in respect of common equity, and (iii) without reduction for any incentive compensation
and any organization or offering costs, in each case determined on an accrual and consolidated basis.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | “total return” means the amount equal to the combination
of ordinary income before incentive compensation, realized capital gains and losses and unrealized capital appreciation and depreciation
of the Company for the period, in each case determined on an accrual and consolidated basis.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If TCPC’s total return does
not exceed the total return limitation, the limitation will not have the effect of eliminating the possibility of paying such incentive
compensation, but rather will postpone any incentive compensation until its cumulative annual total return exceeds the 8% threshold.
The nature of the total return limitation may also make it easier for the Advisor to earn incentive compensation in higher interest
rate environments or if our net asset value has increased.



Total Return Limitation
(based on cumulative annual total return)







Percentage of ordinary income and net
realized capital gain
separately payable at various levels of total return.



The financial highlights in the notes to
TCPC’s financial statements include a calculation of total return based on the change in the market value of TCPC’s
shares. The financial highlights in the notes to TCPC’s financial statements also include a calculation of total return based
on the change in TCPC’s net asset value from period to period. The total return limitation for purposes of the incentive
compensation calculations is based on the stated elements of return: ordinary income before incentive compensation, realized capital
gain and loss and unrealized capital appreciation and depreciation. It differs from the total return based on the market value
or net asset value of TCPC’s shares in that it is a cumulative measurement that is compared to TCPC’s daily weighted-average
contributed common equity rather than a periodic measurement that is compared to TCPC’s net asset value or market value,
and in that it excludes incentive compensation.



12







Examples of Incentive Compensation Calculation



Example 1: Income Portion of Incentive Compensation:



Assumptions



| | · | Total return limitation(1) = 8%                                            
| | - | ---------------------------------------------------------------------------
| |   |                                                                            
| | · | Management fee(2) = 1.5%                                                   
| |   |                                                                            
| | · | Other expenses (legal, accounting, custodian, transfer agent, etc.)(3) = 1%



Alternative 1



Additional Assumptions



| | · | cumulative gross ordinary income (including interest, dividends, fees, etc.) = 11.5%                                   
| | - | -----------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                        
| | · | cumulative ordinary income before incentive compensation (gross ordinary income-(management fee + other expenses)) = 9%
| |   |                                                                                                                        
| | · | cumulative annual total return = 7%                                                                                    
| |   |                                                                                                                        
| | · | prior ordinary income incentive compensation = 0%                                                                      



Cumulative total return does not exceed total return
limitation, therefore there is no income incentive compensation.



| | (1) | Represents
8.0% annualized total return limitation.
| | --- | ---------------------------------------------------



| | (2) | Represents
1.5% annualized management fee, assuming no liabilities.
| | --- | -------------------------------------------------------------------



| | (3) | Excludes
organizational and offering costs.
| | --- | -------------------------------------------



Alternative 2



Additional Assumptions



| | · | cumulative gross ordinary income (including interest, dividends, fees, etc.) = 11%                                      
| | - | ------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                         
| | · | cumulative ordinary income before incentive compensation (gross ordinaryincome–(management fee + other expenses)) = 8.5%
| |   |                                                                                                                         
| | · | cumulative annual total return = 9.5%                                                                                   
| |   |                                                                                                                         
| | · | prior ordinary income incentive compensation = 0%                                                                       



Cumulative ordinary income before incentive compensation
is positive and the cumulative total return exceeds the total return limitation, therefore there is income incentive compensation.



Income incentive compensation = ((20% x ordinary
income before incentive compensation) but not more than ((100% x (cumulative total return up to 10%–8% total return limitation))
+ (20% x cumulative total return above 10%)))



= ((20% x 8.5%) or, if less, ((100% x (9.5%–8%)
+ (20% x 0%)))



= 1.7% or, if less, 1.5%



= 1.5%



13







Alternative 3



Additional Assumptions



| | · | cumulative gross ordinary income (including interest, dividends, fees, etc.) = 15.5%                                    
| | - | ------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                         
| | · | cumulative ordinary income before incentive compensation (gross ordinary income–(management fee + other expenses)) = 13%
| |   |                                                                                                                         
| | · | cumulative annual total return = 18%                                                                                    
| |   |                                                                                                                         
| | · | prior ordinary income incentive compensation = 1%                                                                       
| |   |                                                                                                                         

Cumulative ordinary income before incentive compensation
is positive and cumulative total return exceeds the total return limitation, therefore there is income incentive compensation.

Income incentive compensation = ((20% x ordinary
income before incentive compensation) but not more than ((100% x (cumulative total return up to 10%–8% total return limitation))
+ (20% x cumulative total return above 10%))), less income incentive compensation previously paid



= ((20% x 13%) or, if less, ((100% x (10%–8%)
+ (20% x (18%–10%)))–1%



= (2.6% or, if less, ((2% + (20% x 8%)))–1%



= (2.6% or, if less, (2% + 1.6%))–1%



= (2.6% or, if less, 3.6%)–1%



= 1.6%



Note that due to the priority of capital gains compensation
over ordinary income compensation, had the 5%(4) of cumulative unrealized capital gains been realized, the capital gains incentive
compensation would have been 1% (i.e. 20% x 5%) and would have reduced ordinary income compensation from 1.6% to 0.6%. Further,
if there had been 1.6% or more of prior capital gains compensation, the ordinary income compensation payment would have been zero.



| | (4) | 5%
of cumulative unrealized capital gains = 18% cumulative annual total return — 13% cumulative ordinary income before incentive
compensation
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



Example 2: Capital Gains Portion of Incentive Compensation:



Alternative 1:



Assumptions



| | · | Year 1: $20 million investment made in Company A (“Investment A’’), and $30 million investment made in Company B (“Investment B”).                           
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                              
| | · | Year 2: Investment A sold for $50 million and fair market value, or FMV, of Investment B determined to be $32 million. Cumulative annual total return of 40%.
| |   |                                                                                                                                                              
| | · | Year 3: FMV of Investment B determined to be $25 million. Cumulative annual total return of 15%.                                                             
| |   |                                                                                                                                                              
| | · | Year 4: Investment B sold for $31 million. Cumulative annual total return of 10%.                                                                            



14







The capital gains portion of the incentive
compensation would be:



| | · | Year 1: None                                                                                                                                                                                                                                
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                             
| | · | Year 2: Capital gains incentive compensation of $6 million ($6 million = $30 million realized capital gains on sale of Investment A multiplied by 20% and total return limitation satisfied)                                                
| |   |                                                                                                                                                                                                                                             
| | · | Year 3: None; no realized capital gains.                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                             
| | · | Year 4: Capital gains incentive compensation of $0.2 million ($31 million cumulative realized capital gains multiplied by 20%, less $6 million of capital gains incentive compensation paid in year 2 and total return limitation satisfied)



Alternative 2



Assumptions



| | · | Year 1: $20 million investment made in Company A (“Investment A’’), $30 million investment made in Company B (“Investment B”) and $25 million investment made in Company C (“Investment C”)
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                            
| | · | Year 2: Investment A sold for $50 million, FMV of Investment B determined to be $25 million and FMV of Investment C determined to be $25 million. Cumulative annual total return of 15%.   
| |   |                                                                                                                                                                                            
| | · | Year 3: FMV of Investment B determined to be $27 million and Investment C sold for $30 million. Cumulative annual total return of 7%.                                                      
| |   |                                                                                                                                                                                            
| | · | Year 4: FMV of Investment B determined to be $35 million. Cumulative annual total return of 20%.                                                                                           
| |   |                                                                                                                                                                                            
| | · | Year 5: Investment B sold for $40 million. Cumulative annual total return of 20%.                                                                                                          



The capital gains portion of the incentive
compensation would be:



| | · | Year 1: None                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | · | Year 2: Capital gains incentive compensation of $5 million; 20% multiplied by $25 million ($30 million realized capital gains on Investment A less $5 million unrealized capital depreciation on Investment B, and the total return limitation is satisfied)                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | · | Year 3: None as the total return limitation is not satisfied                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | · | Year 4: Capital gains incentive compensation of $2 million ($35 million cumulative realized capital gains (including $5 million of realized capital gains from year 3 at a time when the total return limitation was not satisfied and no cumulative unrealized capital depreciation) multiplied by 20%, less $5 million capital gains incentive compensation paid in year 2, and the total return limitation is satisfied).
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | · | Year 5: Capital gains incentive compensation of $2 million ($45 million cumulative realized capital gains multiplied by 20%, less $7 million in capital gains incentive compensation paid in years 2 and 4, and the total return limitation is satisfied).                                                                                                                                                                  



Payment of our expenses



All investment professionals and staff of
the Advisor, when and to the extent engaged in providing investment advisory and management services, and the compensation and
routine overhead expenses of such personnel allocable to such services (including health insurance, 401(k) plan benefits, payroll
taxes and other compensation related matters), are provided and paid for by the Advisor. We bear all other costs and expenses of
our operations and transactions, including those relating to:



15









| | · | our organization;                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                               
| | · | calculating our net asset value (including the cost and expenses of any independent valuation firm);                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                               
| | · | expenses, including travel expense, incurred by the Advisor or payable to third parties in performing due diligence on prospective portfolio companies, monitoring our investments and, if necessary, enforcing our rights;                                                                                   
| |   |                                                                                                                                                                                                                                                                                                               
| | · | interest payable on debt, if any, incurred to finance our investments;                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                               
| | · | the base management fee and any incentive management fee;                                                                                                                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                               
| | · | administration fees payable under our administration agreement;                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                               
| | · | transfer agent and custody fees and expenses;                                                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                               
| | · | the allocated costs incurred by the General Partner as our Administrator in providing managerial assistance to those portfolio companies that request it;                                                                                                                                                     
| |   |                                                                                                                                                                                                                                                                                                               
| | · | amounts payable to third parties relating to, or associated with, evaluating, making and disposing of investments;                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                               
| | · | brokerage fees and commissions;                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                               
| | · | registration fees;                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                               
| | · | director fees and expenses;                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                               
| | · | costs of preparing and filing reports or other documents with the SEC;                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                               
| | · | the costs of any reports, proxy statements or other notices to our stockholders, including printing costs;                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                               
| | · | costs of holding special meetings of our common limited partner, if any;                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                               
| | · | our fidelity bond;                                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                               
| | · | directors and officers/errors and omissions liability insurance, and any other insurance premiums;                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                               
| | · | litigation, indemnification and other non-recurring or extraordinary expenses;                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                               
| | · | direct costs and expenses of administration and operation, including audit and legal costs;                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                               
| | · | dues, fees and charges of any trade association of which we are a member; and                                                                                                                                                                                                                                 
| |   |                                                                                                                                                                                                                                                                                                               
| | · | all other expenses reasonably incurred by us or the Administrator in connection with administering our business, such as the allocable portion of overhead under our administration agreement, including rent and other allocable portions of the cost of certain of our officers and their respective staffs.



From time to time, the Advisor may
pay amounts owed by us to third party providers of goods or services. We will subsequently reimburse the Advisor for such amounts
paid on our behalf.



Limitation of liability and indemnification



The investment management agreements provide
that the Advisor and its officers, directors, employees and affiliates are not liable to us or to the common limited partner for
any act or omission by it or its employees in the supervision or management of our investment activities or for any loss sustained
by us or the common limited partner, except that the foregoing exculpation does not extend to any act or omission constituting
willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations under the investment management agreement.
The investment management agreements also provide for indemnification by us of the Advisor’s members, directors, officers,
employees, agents and control persons for liabilities incurred by it in connection with their services to us, subject to the same
limitations and to certain conditions.



16







Board and shareholder approval of the investment management
agreements



Our board of directors held an in-person
meeting on May 1, 2013, in order to consider and reapprove our investment management agreements. In its consideration of the investment
management agreement, the board of directors focused on information it had received relating to, among other things: (a) the nature,
quality and extent of the advisory and other services to be provided to us by the Advisor; (b) comparative data with respect to
advisory fees or similar expenses paid by other business development companies with similar investment objectives; (c) our financial
performance, operating expenses and expense ratio compared to business development companies with similar investment objectives;
(d) any existing and potential sources of indirect income to the Advisor from its relationships with us and the profitability of
those relationships; (e) information about the services performed and the personnel performing such services under the investment
management agreements; (f) the organizational capability and financial condition of the Advisor and its affiliates; (g) the Advisor’s
practices regarding the selection and compensation of brokers that execute our portfolio transactions and the brokers’ provision
of brokerage and research services to our investment advisor; and (h) the possibility of obtaining similar services from other
third party service providers or through an internally managed structure.



Based on the information reviewed and the
discussions, the board of directors, including a majority of the non-interested directors, concluded that the investment management
fee rates are reasonable in relation to the services to be provided.

Duration and termination



The investment management agreements will
remain in effect from year to year if approved annually by our board of directors or by the affirmative vote of the holders of
a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not
interested persons. The investment management agreements will automatically terminate in the event of its assignment. The investment
management agreements may be terminated by either party without penalty upon not less than 60 days written notice to the other.
Any termination by us must be authorized either by our board of directors or by vote of our limited partners. See “Risk Factors
— Risks related to our business — We are dependent upon senior management personnel of the Advisor for our future success,
and if the Advisor is unable to retain qualified personnel or if the Advisor loses any member of its senior management team, our
ability to achieve our investment objective could be significantly harmed.”



Administration Agreement



We have entered into administration agreements
with the Administrator, which we refer to as the administration agreement, under which the Administrator provides administrative
services to us. The Administrator provides services including, but not limited to, the arrangement for the services of, and the
overseeing of, custodians, depositories, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers,
banks, and such other persons in any such other capacity deemed to be necessary or desirable. The Administrator also makes reports
to the board of its performance of obligations under the administration agreement and furnishes advice and recommendations with
respect to such other aspects of our business and affairs that we determine to be desirable. The Administrator is responsible for
our financial and other records that are required to be maintained and prepares all reports and other materials required by any
agreement or to be filed with the Securities and Exchange Commission or any other regulatory authority, including reports on Forms
8-K, 10-Q and periodic reports to limited partners, determining the amounts available for distribution as dividends and distributions
to be paid by us to our limited partners, maintaining or overseeing the maintenance of our books and records as required under
the 1940 Act, and maintaining (or overseeing maintenance by other persons) such other books and records required by law or for
our proper operation. For providing these services, facilities and personnel, we reimburse the Administrator for expenses incurred
by the Administrator in performing its obligations under the administration agreement, including our allocable portion of overhead
under the administration agreement and the cost of certain of our officers and the Administrator’s administrative staff and
providing, at our request and on our behalf, significant managerial assistance to our portfolio companies to which we are required
to provide such assistance. From time to time, the Administrator may pay amounts owed by us to third-party providers of goods or
services. We subsequently reimburse the Administrator for such amounts paid on our behalf.



Leverage



Our leverage program is comprised of $116
million in available debt under a senior secured revolving credit facility issued by the Partnership (the “Partnership Facility”),
$100 million in available debt under a senior secured revolving credit facility issued by TCPC Funding, (the “TCPC Funding
Facility,” and, together with the Partnership Facility, the “Revolving Facilities”), and $134 million of outstanding
preferred limited partner interests in the Partnership (the “Preferred Interests,” and, together with the Revolving
Facilities, the “Leverage Program”).



17







The Partnership Facility matures on July
31, 2016 and bears interest at LIBOR plus 0.44% per annum (except in the case of loans from CP Conduits, which bear interest at
the higher of LIBOR plus 0.44% or the CP Conduit’s cost of funds plus 0.44%, subject to certain limitations) through July
31, 2014, and LIBOR plus 2.50% per annum (except in the case of loans from CP Conduits, as defined in the leverage documents, which
bear interest at the higher of LIBOR plus 2.50% or the CP Conduit’s cost of funds plus 2.50%, subject to certain limitations
on the CP Conduit interest rate) from August 1, 2014 through maturity.



The TCPC Funding Facility matures May 15,
2017, subject to extension by the lender at the request of TCPC Funding, and contains an accordion feature which allows for expansion
of the facility up to $200 million subject to consent from the lender and other customary conditions.  Borrowings under the
TCPC Funding Facility bear interest at a rate of LIBOR plus 2.75% per annum through March 14, 2014, and a rate of LIBOR plus 2.50%
per annum from March 15, 2014 through maturity.



The Preferred Interests have a liquidation
preference of $20,000 per preferred limited interest, and are redeemable at the option of the Operating Company, subject to certain
conditions.  The Preferred Interests accrue dividends at an annual rate equal to LIBOR plus 0.85% or, in the case of any holders
of Preferred Interests that are CP Conduits, the higher of LIBOR plus 0.85% or the CP Conduit’s cost of funds rate plus 0.85%,
subject to certain limitations and adjustments.



The Leverage Program is subject to certain
financial or other covenants.  As of December 31, 2013, we were in full compliance with such covenants.



Item 1A.	Risk Factors



An investment in our securities involves
certain risks relating to our structure and investment objectives. The risks set forth below are not the only risks we face, and
we face other risks which we have not yet identified, which we do not currently deem material or which are not yet predictable.
If any of the following risks occur, our business, financial condition and results of operations could be materially adversely
affected. In such case, our net asset value could decline, and you may lose all or part of your investment.



Certain risks in the current environment



Capital markets could experience a period of disruption
and instability. Such market conditions have historically and could again have a material and adverse effect on debt and equity
capital markets in the United States and abroad, which had, and may in the future have, a negative impact on our business and operations.



The global capital markets have historically
experienced extended periods of instability as evidenced by the periodic disruptions in liquidity in the debt capital markets,
significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market
and the failure of certain major financial institutions. Despite actions of the United States federal government and foreign governments
during such periods, these events contributed to worsening general economic conditions that materially and adversely impacted the
broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial
services firms in particular. While recent market conditions have improved, there can be no assurance that adverse market conditions
will not repeat themselves or worsen in the future. If these adverse and volatile market conditions repeat themselves or worsen
in the future, we and other companies in the financial services sector may have to access, if available, alternative markets for
debt and equity capital in order to grow. Equity capital may be difficult to raise because, subject to some limited exceptions,
as a BDC, we are generally not able to issue additional shares of common stock at a price less than net asset value without first
obtaining approval for such issuance from our stockholders and our independent directors. At our annual meeting of stockholders
held on May 1, 2013, subject to the condition that the maximum number of shares salable below net asset value pursuant to this
authority in any particular offering that could result in such dilution is limited to 25% of our then outstanding common stock
immediately prior to each such offering, our stockholders approved our ability to sell or otherwise issue shares of our common
stock at a price below its then current net asset value per share for a twelve month period expiring on the anniversary of the
date of stockholder approval. It should be noted that, theoretically, we may offer up to 25% of our then outstanding common stock
each day. In addition, our ability to incur indebtedness (including by issuing preferred stock) is limited by applicable regulations
such that our asset coverage, as calculated in accordance with the 1940 Act, must equal at least 200% immediately after each time
we incur indebtedness. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less
favorable terms and conditions than our current leverage. Any inability to raise capital could have a negative effect on our business,
financial condition and results of operations.



Moreover, the re-appearance of market conditions
similar to those experienced from 2007 through succeeding years for any substantial length of time could make it difficult to extend
the maturity of or refinance our existing indebtedness under similar terms, and any failure to do so could have a material adverse
effect on our business.



18









Given the extreme volatility and dislocation
that the capital markets have historically experienced, many BDCs have faced, and may in the future face, a challenging environment
in which to raise or access capital. In addition, significant changes in the capital markets, including the extreme volatility
and disruption over the past several years, has had, and may in the future have, a negative effect on the valuations of our investments
and on the potential for liquidity events involving our investments. While most of our investments are not publicly traded, applicable
accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market
to market participants (even if we plan on holding an investment through its maturity). As a result, volatility in the capital
markets can adversely affect our investment valuations. Further, the illiquidity of our investments may make it difficult for us
to sell such investments to access capital if required. As a result, we could realize significantly less than the value at which
we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital
could have a material adverse impact on our business, financial condition or results of operations.



The current financial market situation,
as well as various social and political tensions in the United States and around the world, particularly in the Middle East, may
continue to contribute to increased market volatility, may have long-term effects on the United States and worldwide financial
markets, and may cause further economic uncertainties or deterioration in the United States and worldwide. Since 2010, several
European Union countries, including Greece, Ireland, Italy, Spain, and Portugal have faced budget issues, some of which may have
negative long-term effects for the economies of those countries and other European Union countries. There is continued concern
about national-level support for the euro and the accompanying coordination of fiscal and wage policy among European Economic and
Monetary Union member countries. We do not know how long the financial markets will continue to be affected by these events and
cannot predict the effects of these or similar events in the future on the United States economy and securities markets or on our
investments. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective,
but there can be no assurance that we will be successful in doing so, and we may not timely anticipate or manage existing, new
or additional risks, contingencies or developments, including regulatory developments in the current or future market environment.



Risks related to our business



We may not replicate the Partnership’s historical
performance or the historical performance of other entities managed or supported by the Advisor.



We may not be able to replicate the Partnership’s
historical performance or the historical performance of the Advisor’s investments, and our investment returns may be substantially
lower than the returns achieved by the Partnership in the past. We can offer no assurance that the Advisor will be able to continue
to implement our investment objective with the same degree of success as it has had in the past.



We may suffer credit losses.



Investment in middle-market companies is
highly speculative and involves a high degree of risk of credit loss, and therefore our securities may not be suitable for someone
with a low tolerance for risk. These risks are likely to increase during an economic recession, such as the United States and many
other economies experienced over the past several years.



Our use of borrowed funds and preferred securities, including
under the Leverage Program, to make investments exposes us to risks typically associated with leverage.



The Partnership borrows money, either directly
or indirectly through TCPC Funding, and has the Preferred Interests outstanding through the Leverage Program. As a result:



| | · | our common limited partner interests are exposed to incremental risk of loss and a decrease in the value of our investments would have a greater negative impact on the value of our common limited partner interests than if we did not use leverage;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                       
| | · | adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of any leverage;                                                                                                                         
| |   |                                                                                                                                                                                                                                                       
| | · | we, and indirectly our common limited partner, bear the entire cost of issuing and paying interest or dividends on any borrowed funds or preferred securities issued by us or the Partnership;                                                        





19









| | · | our ability to pay distributions will be restricted if our asset coverage ratio is not at least 200% and any amounts used to service indebtedness or preferred stock would not be available for such distributions; and    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                            
| | · | our ability to amend the Operating Company organizational documents or investment management agreements may be restricted if such amendment could have a material adverse impact on the lenders under our Leverage Program.



The Preferred Interests have similar risks
to our common limited partner as borrowings. The Preferred Interests rank “senior” to the common limited partner in
our capital structure, resulting in the Preferred Interests having certain separate voting rights, dividend and liquidation rights,
and possibly other rights, preferences or privileges more favorable than those granted to the common limited partner. For example,
payment of dividends and repayment of the liquidation preference of the Preferred Interests takes preference over any dividends
or other payments to our common limited partner, and preferred holders are not subject to any of our expenses or losses. Furthermore,
our Preferred Interests and the issuance of any additional preferred securities could delay, defer or prevent a transaction or
a change of control that might involve a premium price for our common limited partner or otherwise be in the best interest of the
common limited partner.



The use of leverage creates increased risk
of loss and is considered a speculative investment technique. The use of leverage magnifies the potential gains and losses from
an investment and increases the risk of loss of capital. To the extent that income derived by us from investments purchased with
borrowed funds or the issuances of preferred stock is greater than the cost of borrowing or issuing and servicing the preferred
stock, our net income will be greater than if borrowing had not been used. Conversely, if the income from investments purchased
from these sources is not sufficient to cover the cost of the leverage, our net investment income will be less than if leverage
had not been used, and the amount available for ultimate distribution to the common limited partner will be reduced. The extent
to which the gains and losses associated with leveraged investing are increased will generally depend on the degree of leverage
employed. We may, under some circumstances, be required to dispose of investments under unfavorable market conditions in order
to maintain our leverage, thus causing us to recognize a loss that might not otherwise have occurred. In the event of a sale of
investments upon default under our borrowing arrangements, secured creditors will be contractually entitled to direct such sales
and may be expected to do so in their interest, rather than in the interests of common limited partner. The common limited partner
will incur losses if the proceeds from a sale in any of the foregoing circumstances are insufficient, after payment in full of
amounts due and payable on leverage, including administrative expenses, to repay the common limited partner. As a result, the common
limited partner could experience a total loss of its investment. Any decrease in our revenue would cause our net income to decline
more than it would have had we not borrowed funds and could negatively affect our ability to make distributions on our common limited
partner interests. The ability to service any debt or the Preferred Interests that we have or may have outstanding depends largely
on our financial performance and is subject to prevailing economic conditions and competitive pressures. There is no limitation
on the percentage of portfolio investments that can be pledged to secure borrowings. The amount of leverage that we employ at any
particular time will depend on our Advisor’s and our board of director’s assessments of market and other factors at
the time of any proposed borrowing.



In addition to regulatory restrictions that restrict our
ability to raise capital, the Leverage Program contains various covenants which, if not complied with, could accelerate repayment
under the Revolving Facilities or require redemption of the Preferred Interests, thereby materially and adversely affecting our
liquidity, financial condition and results of operations.



Under the Leverage Program, we must comply
with certain financial and operational covenants. These covenants include:



| | · | restrictions on the level of indebtedness that we are permitted to incur and the number of Preferred Interests we are permitted to have outstanding in relation to the value of our assets;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                            
| | · | restrictions on our ability to make distributions and other restricted payments under certain circumstances;                                                                               
| |   |                                                                                                                                                                                            
| | · | restrictions on extraordinary events, such as mergers, consolidation and sales of assets;                                                                                                  
| |   |                                                                                                                                                                                            
| | · | restrictions on our ability to incur liens and incur indebtedness; and                                                                                                                     
| |   |                                                                                                                                                                                            
| | · | maintenance of a minimum level of common limited partner equity.                                                                                                                           



20







In addition, by limiting the circumstances
in which borrowings may occur under the Revolving Facilities, the credit agreements related to the Revolving Facilities, or the
Credit Agreements, in effect provide for various asset coverage, credit quality and diversification limitations on our investments.
Such limitations may cause us to be unable to make or retain certain potentially attractive investments or to be forced to sell
investments at an inappropriate time and consequently impair our profitability or increase losses or result in adverse tax consequences.
As of March 5, 2014, we were in compliance with these covenants. However our continued compliance with these covenants depends
on many factors, some of which are beyond our control. Accordingly, there are no assurances that we will continue to comply with
the covenants in the Credit Agreements. Failure to comply with these covenants would result in a default under the Credit Agreements
which, if we were unable to obtain a waiver from the respective lenders thereunder, could result in an acceleration of repayments
under the Credit Agreements. In addition, a default under the Operating Company Facility will, in certain circumstances, require
the Preferred Interests to be redeemed. As such, failure to comply with these covenants could have a material adverse impact on
our business, financial condition and results of operations.



The Partnership Facility also has certain
“key man” provisions. For example, it is an event of default if any of Michael E. Tennenbaum, Howard M. Levkowitz or
Mark K. Holdsworth ceases to be actively involved in the management of the Partnership and is not replaced with someone with comparable
skills within 180 days. Further, if any two of the individuals cease to be actively involved in management of the Partnership,
the administrative agent under the Partnership Credit Agreement may veto a proposed replacement for one of such individuals and
may veto any of the Partnership’s portfolio transactions that are in excess of 15% of its total assets until a replacement
has been appointed to fill one of such positions.



The Partnership Facility matures in July 2016, the TCPC
Funding Facility matures in May 2017 and the Preferred Interests will be subject to mandatory redemption in July 2016. Any inability
to renew, extend or replace the Revolving Facilities or replace the Preferred Interests could adversely impact our liquidity and
ability to find new investments or maintain distributions to our stockholders, subject to extension by the lenders at our request.



The Partnership Facility matures July 31,
2016, subject to extension by the lenders at our request. Advances under the Partnership Facility generally bear interest at LIBOR
plus 0.44% per annum through July 31, 2014 and LIBOR plus 2.50% per annum during the period August 1, 2014 through July 31, 2016,
in each case subject to certain limitations. The TCPC Funding Facility matures on May 15, 2017, subject to an extension by the
lender at TCPC Funding's request. Advances under the TCPC Funding Facility generally bears interest based on LIBOR plus 2.75%
per annum, subject to certain limitations. The Preferred Interests will be subject to mandatory redemption on July 31, 2016. We
do not currently know whether we will renew, extend or replace the Revolving Facilities upon their maturities or replace the Preferred
Interests, or if we do either or both, whether we will be able to do so on terms that are as favorable as the Revolving Facilities
or Preferred Interests, respectively. In addition, we will be required to liquidate assets to repay amounts due under the Revolving
Facilities or the Preferred Interests if we do not renew, extend or replace the Revolving Facilities or Preferred Interests prior
to their respective maturities.



Upon the termination of the Revolving Facilities, there can
be no assurance that we will be able to enter into a replacement facility on terms that are as favorable to us, if at all. We expect
that any facility we enter into will likely be on terms less favorable than currently contained in the Partnership Facility. Our
ability to replace the Revolving Facilities may be constrained by then-current economic conditions affecting the credit markets.
In the event that we are not able to replace the Revolving Facilities at the time of their maturity, this could have a material
adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our common limited partner
and our ability to qualify as a RIC.



The creditors under the Revolving Facilities have a first
claim on all of the Partnership’s assets included in the collateral for the respective facilities.



Lenders have fixed dollar claims on our
assets that are superior to the claims of our common limited partner or any preferred holders. Substantially all of our current
assets have been pledged as collateral under the Revolving Facilities. If an event of default occurs under either of the Revolving
Facilities, the respective lenders would be permitted to accelerate amounts due under the respective facilities and liquidate our
assets to pay off amounts owed under the respective facilities and limitations would be imposed on us with respect to the purchase
or sale of investments. Such limitations may cause us to be unable to make or retain certain potentially attractive investments
or to be forced to sell investments at an inappropriate time and consequently impair our profitability or increase our losses or
result in adverse tax consequences.



In the event of the dissolution of the Partnership
or otherwise, if the proceeds of the Partnership’s assets (after payment in full of obligations to any such debtors and of
any liquidation preference to any holders of preferred stock) are insufficient to repay capital invested in us by our common limited
partner, no other assets will be available for the payment of any deficiency. None of our board of directors, the Advisor, the
General Partner or any of their respective affiliates, have any liability for the repayment of capital contributions made to the
Partnership by the common limited partner. The common limited partner could experience a total loss of its investment in the Partnership.



21







Lenders under the Partnership Facility may have a veto
power over the Partnership’s investment policies.



If a default has occurred under the Partnership
Facility, the lenders under the Partnership Facility may veto changes in investment policies. The Partnership Facility also has
certain limitations on unusual types of investments such as commodities, real estate and speculative derivatives, which are not
part of the Partnership’s investment strategy or policies in any event.



If we incur additional
leverage, it will increase the risk of investing in our common limited partner interests.



The Partnership has indebtedness and the
Preferred Interests outstanding pursuant to the Leverage Program and expects, in the future, to borrow additional amounts under
the Revolving Facilities and may increase the size of the Revolving Facilities or enter into other borrowing arrangements.



Illustration. The following table
illustrates the effect of leverage on returns from an investment in our common limited partner interests assuming various annual
returns, net of expenses and preferred dividends. The calculations in the table below are hypothetical and actual returns may be
higher or lower than those appearing below. The calculation is based on our level of leverage at December 31, 2013, which represented
borrowings and preferred stock equal to 28.5% of our total assets. On such date, we also had $803.3 million in total assets; an
average cost of funds of 1.38%; $229.0 million aggregate principal amount of debt and liquidation preference of the Preferred Interests
outstanding; and $549.6 million of total net assets. In order to compute the ‘‘Corresponding Return to the Common Limited
Partner,” the ‘‘Assumed Return on Portfolio (Net of Expenses Other than Interest and Preferred Dividends)”
is multiplied by the total value of our investment portfolio at December 31, 2013 to obtain an assumed return to us. From this
amount, the sum of interest expense and preferred dividends calculated by multiplying the combined rate of interest and dividends
of 1.38% by the $229.0 million debt and preferred stock is subtracted to determine the return available to limited partners. The
return available to the common limited partner is then divided by the total value of our net assets at December 31, 2013 to determine
the “Corresponding Return to the Common Limited Partner.” Actual interest payments and preferred dividends may vary.



|Assumed Return on Portfolio (Net of Expenses Other than Interest and Preferred Dividends) |  |  | -10 | % |  |  | -5 | % |  |  | 0  | % |  |  | 5 | % |  |  | 10 | %
|----------------------------------------------------------------------------------------- |  |  | --- | - |  |  | -- | - |  |  | -- | - |  |  | - | - |  |  | -- | -
|Corresponding Return to the Common Limited Partner                                        |  |  | -14 | % |  |  | -8 | % |  |  | -1 | % |  |  | 6 | % |  |  | 13 | %



The assumed portfolio return in the table
is based on SEC regulations and is not a prediction of, and does not represent, our projected or actual performance. The table
also assumes that we will maintain a constant level of leverage. The amount of leverage that we use will vary from time to time.



The lack of liquidity in substantially
all of our investments may adversely affect our business.



Our investments generally are made and will
continue to be made in private companies. Substantially all of these securities will be subject to legal and other restrictions
on resale or will be otherwise less liquid than publicly traded securities. The illiquidity of our investments may make it difficult
for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio
quickly, we may realize significantly less than the value at which we had previously recorded our investments. Further, we may
face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we or an affiliated
manager has material non-public information regarding such portfolio company.



A substantial portion of our portfolio investments may
be recorded at fair value as determined in good faith by or under the direction of our board of directors and, as a result, there
may be uncertainty regarding the value of our portfolio investments.



The debt and equity
investments that we make for which market quotations are not readily available will be valued at fair value as determined in good
faith by or under the direction of our board of directors. Due to the inherent uncertainty of determining the fair value of investments
that do not have a readily available market value, the fair value of our investments may differ significantly from the values that
would have been used had a readily available market value existed for such investments, and the differences could be material.
Our net asset value could be adversely affected if determinations regarding the fair value of these investments were materially
higher than the values ultimately realized upon the disposal of such investments.



We are exposed to risks associated
with changes in interest rates.



General interest rate fluctuations may have
a substantial negative impact on our investments, the value of our common stock and our rate of return on invested capital. A reduction
in the interest rates on new investments relative to interest rates on current investments could also have an adverse impact on
our net investment income. An increase in interest rates could decrease the value of any investments we hold that earn fixed interest
rates, including subordinated loans, senior and junior secured and unsecured debt securities and loans and high-yield bonds, and
also could increase our interest expense, thereby decreasing our net income. Also, an increase in interest rates available to investors
could make investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce
the value of our common stock.



22









The Advisor may face conflicts in
allocating investment opportunities between us and certain other entities that could adversely impact our investment returns.



The Advisor and its affiliates, employees
and associates currently do and in the future may manage other funds and accounts, including for other accounts in which certain
holders of our common stock have investments, which we refer to as Other Advisor Accounts. Other Advisor Accounts invest in assets
that are also eligible for purchase by us. Our investment policies, fee arrangements and other circumstances may vary from those
of Other Advisor Accounts. Accordingly, conflicts may arise regarding the allocation of investments or opportunities among us and
Other Advisor Accounts. In general, the Advisor and its affiliates will allocate investment opportunities pro rata among us and
Other Advisor Accounts (assuming the investment satisfies the objectives of each) based on the amount of committed capital each
then has available. The allocation of certain investment opportunities in private placements is subject to independent director
approval pursuant to the terms of the co-investment exemptive order applicable to us and described below. In certain cases, investment
opportunities may be made other than on a pro rata basis. For example, we may desire to retain an asset at the same time that one
or more Other Advisor Accounts desire to sell it or we may not have additional capital to invest at a time Other Advisor Accounts
do. When our investment allocations are made on a basis other than pro rata our investment performance may be less favorable when
compared to the investment performance of Other Advisor Accounts with respect to those investments. The Advisor and its affiliates
intend to allocate investment opportunities to us and Other Advisor Accounts in a manner that they believe in their judgment and
based upon their fiduciary duties to be appropriate given the investment objectives, size of transaction, investable assets, alternative
investments potentially available, prior allocations, liquidity, maturity, expected holding period, diversification, lender covenants
and other limitations of ours and the Other Advisor Accounts. See “— Risks related to our operations as a BDC —
While our ability to enter into transactions with our affiliates is restricted under the 1940 Act, we have received an exemptive
order from the SEC permitting certain affiliated investments subject to certain conditions. As a result, the Advisor may face conflicts
of interests and investments made pursuant to the exemptive order conditions could in certain circumstances adversely affect the
price paid or received by us or the availability or size of the position purchased or sold by us.”



There may be situations in which Other Advisor
Accounts and the Partnership might invest in different securities issued by the same portfolio company. It is possible that if
the portfolio company’s financial performance and condition deteriorates such that one or both investments are or could be
impaired, the Advisor might face a conflict of interest given the difference in seniority of the respective investments. In such
situations, the Advisor would review the conflict on a case-by-case basis and implement procedures consistent with its fiduciary
duty to enable it to act fairly to the Other Advisor Accounts and the Partnership in the circumstances. Any steps by the Advisor
will take into consideration the interests of each of the affected clients, the circumstances giving rise to the conflict, the
procedural efficacy of various methods of addressing the conflict and applicable legal requirements.



Moreover, the Advisor’s investment
professionals, its Investment Committee (as defined below), its senior management and employees serve or may serve as officers,
directors or principals of entities that operate in the same or a related line of business. Accordingly, these individuals may
have obligations to investors in those entities or funds, the fulfillment of which might not be in our best interests or the best
interests of our common limited partner. In addition, certain of the personnel employed by the Advisor or focused on our business
may change in ways that are detrimental to our business.



The Advisor and its partners, officers, directors, members,
managers, employees, affiliates and agents may be subject to certain potential or actual conflicts of interest in connection with
the activities of, and investments by, us.



The Advisor and its affiliates may spend
substantial time on other business activities, including investment management and advisory activities for entities with the same
or overlapping investment objectives, investing for their own account, financial advisory services (including services for entities
in which we invest), and acting as directors, officers, creditor committee members or in similar capacities. Subject to the requirements
of the 1940 Act and other applicable laws, the Advisor and its affiliates and associates intend to engage in such activities and
may receive compensation from third parties for their services. Subject to the same requirements, such compensation may be payable
by entities in which we invest in connection with actual or contemplated investments, and the Advisor may receive fees and other
compensation in connection with structuring investments which they will share.



The Advisor’s management fee is based
on a percentage of our total assets (other than cash or cash equivalents) and the Advisor may have conflicts of interest in connection
with decisions that could affect our total assets, such as decisions as to whether to incur additional debt to increase management
fees paid and to recoup the Advisor’s payment of half of the sales load in connection with our initial public offering in
April 2012.



23







Our incentive compensation may induce the Advisor
to make certain investments, including speculative investments.



The incentive compensation payable by us
to the Advisor and the General Partner may create an incentive for the Advisor to make investments on our behalf that are risky
or more speculative than would be the case in the absence of such compensation arrangement. The way in which the incentive compensation
payable to the Advisor is determined may encourage the Advisor to increase the use of leverage or take additional risk to increase
the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would
disfavor the holders of our common stock, or of securities convertible into our common stock or warrants representing rights to
purchase our common stock or securities convertible into our common stock. A rise in the general level of interest rates can be
expected to lead to higher interest rates applicable to certain of our debt investments and may accordingly result in a substantial
increase in the amount of incentive compensation payable to the Advisor with respect to our cumulative investment income. Although
the incentive compensation payable to the General Partner or the Advisor is subject to a total return limitation, the Advisor may
have some ability to accelerate the realization of gains to obtain incentive compensation earlier than it otherwise would when
it may be in our best interests to not yet realize gains. Our directors monitor our use of leverage and the Advisor’s management
of our investment program in the best interests of our common limited partner.



We may invest, to the extent permitted by
law, in the securities and instruments of other investment companies, including private funds, and, to the extent we so invest,
we will bear our ratable share of any such investment company’s expenses, including management and performance fees. We will
also remain obligated to pay management and incentive compensation to the Advisor with respect to the assets invested in the securities
and instruments of other investment companies. With respect to each of these investments, our common limited partner will bear
our management and incentive compensation as well as indirectly bear the management and performance fees and other expenses of
any investment companies in which we invest.



We may be obligated to pay the Advisor incentive compensation
payments in excess of the amounts we would have paid if such compensation was subject to clawback arrangements.



The Advisor or the General Partner is entitled
to incentive compensation for each fiscal quarter after January 1, 2013 in an amount equal to a percentage of our ordinary income
(before deducting incentive compensation) since that date and, separately, a percentage of our realized capital gains (net of realized
capital losses and unrealized depreciation) since that date, in each case subject to a cumulative total return requirement. If
we pay incentive compensation and thereafter experience additional realized capital losses or unrealized capital depreciation such
that we would no longer have been required to provide incentive compensation, we will not be able to recover any portion of the
incentive compensation previously paid or distributed because our incentive compensation arrangements do not contain any clawback
provisions. As a result, the incentive compensation could exceed 20% of our cumulative total return, depending on the timing of
unrealized appreciation, net unrealized depreciation and net realized capital losses. For example, part of the incentive compensation
payable or distributable by us that relates to our ordinary income is computed on income that may include interest that has been
accrued but not yet received in cash. If a portfolio company defaults on a loan, it is possible that accrued interest previously
used in the calculation of the incentive compensation will become uncollectible. Similarly, the income component is measured against
a total return limitation that includes unrealized gains. Such gains may not be realized or may be realized at a lower amount.
Consequently, we may have paid incentive compensation on income in circumstances where we otherwise would not have done so and
with respect to which we do not have a clawback right against the Advisor or the General Partner.



The General Partner may have certain interests that conflict
with the interests of the board of directors in the governance of the Partnership.



The General Partner, an affiliate of the
Advisor, is responsible for the day-to-day operations of the Partnership subject to the general supervision of the board of directors
including various significant matters such as the issuance of additional classes of securities of the Partnership and the determination
of the timing and amounts of distributions payable by the Partnership. The decisions of the General Partner with respect to these
and other matters may be subject to various conflicts of interest arising out of its relationship with us and its affiliates. The
General Partner could be confronted with decisions where it will, directly or indirectly, have an economic incentive to place its
interests or the interests of its affiliates above ours.



The procedures for the appointment and removal of directors
from the board of directors of the Partnership differ from those of TCPC, which may result in the boards of directors of the Partnership
and TCPC consisting of different members.



The procedures for the appointment and removal
of directors from the board of directors of the Partnership differ from those of TCPC, which may result in the boards of directors
of the Partnership and TCPC consisting of different members. If the boards of directors of the Partnership and TCPC consist of
different members, the objectives of the boards of directors may differ and decisions regarding the management of the Partnership
may adversely affect TCPC.



24







We are dependent upon senior management personnel of the
Advisor for our future success, and if the Advisor is unable to retain qualified personnel or if the Advisor loses any member of
its senior management team, our ability to achieve our investment objective could be significantly harmed.



The success of the Partnership is highly
dependent on the financial and managerial expertise of the Advisor. The loss of one or more of the voting members of the Investment
Committee could have a material adverse effect on the performance of the Partnership. Although the Advisor and the voting members
of the Investment Committee devote a significant amount of their respective efforts to the Partnership, they actively manage investments
for other clients and are not required to (and will not) devote all of their time to the Partnership’s affairs.



The Advisor or its affiliates may, from time to time,
possess material non-public information, limiting our investment discretion.



The Advisor’s investment professionals,
Investment Committee or their respective affiliates may serve as directors of, or in a similar capacity with, companies in which
we invest. In the event that material non-public information is obtained with respect to such companies, or we became subject to
trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we
could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may
have an adverse effect on us and, consequently, the interests of the common limited partner.



The Advisor can resign on 60 days’ notice, and we
may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely
affect our financial condition, business and results of operations.



The Advisor has the right, under our investment
management agreement, to resign at any time upon not more than 60 days’ written notice, whether we have found a replacement
or not. If the Advisor resigns, we may not be able to find a new investment advisor or hire internal management with similar expertise
and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so
quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well
as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline. In addition,
the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach
an agreement with a single institution or group of executives having the expertise possessed by the Advisor and its affiliates.
Even if we are able to retain comparable management, whether internal or external, the integration of such management and their
lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our
financial condition, business and results of operations.



We may experience fluctuations in our periodic operating
results.



We could experience fluctuations in our
periodic operating results due to a number of factors, including the interest rates payable on the debt securities we acquire,
the default rate on such securities, the level of our expenses (including the interest rates payable on our borrowings), the dividend
rates payable on preferred stock we issue, variations in and the timing of the recognition of realized and unrealized gains or
losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors,
results for any period should not be relied upon as being indicative of performance in future periods.



If we fail to maintain our status as a business development
company, our business and operating flexibility could be significantly reduced.



We qualify as business development companies
under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of business development companies. For example,
BDCs are prohibited from making any unqualifying investments unless at least 70% of their total assets are invested in qualifying
investments which are primarily securities of private or thinly-traded U.S. companies, cash, cash equivalents, U.S. government
securities and other high quality debt investments that mature in one year or less. Failure to comply with the requirements imposed
on business development companies by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us
to claims of private litigants. In addition, any such failure could cause an event of default under the Leverage Program, which
could have a materially adverse effect on our business, financial conditions or results of operations.



Because we intend to distribute substantially all of our
income to TCPC to maintain its status as a RIC, we will continue to need additional capital to finance growth. If additional funds
are unavailable or not available on favorable terms, our ability to grow will be impaired.



In order for TCPC to qualify for the tax
benefits available to RICs and to minimize payment of excise taxes, we intend to distribute substantially all of our annual taxable
income, except that we may retain certain net capital gains for reinvestment. As a result of these requirements, we will likely
need to raise capital from other sources to grow our business. Unfavorable economic or capital market conditions may increase our
funding costs, limit our access to the capital markets or could result in a decision by lenders not to extend credit to us. An
inability to successfully access the capital markets could limit our ability to grow our business and fully execute our business
strategy and could decrease our earnings, if any.



25







As a BDC, we are not able to incur senior
securities unless after giving effect thereto we meet a coverage ratio of total assets, less liabilities and indebtedness not represented
by senior securities, to total senior securities, which includes all of our borrowings and any outstanding preferred interests,
of at least 200%. These requirements limit the amount that we may borrow. Because we will continue to need capital to grow our
investment portfolio, these limitations may prevent us from incurring debt and require us to raise additional equity at a time
when it may be disadvantageous to do so. While we expect we will be able to borrow and to issue additional debt securities and
expect that we will be able to issue additional equity securities, we cannot assure you that debt and equity financing will be
available to us on favorable terms, or at all. In addition, as a business development company, TCPC generally will not be permitted
to issue equity securities priced below net asset value without stockholder approval. If additional funds are not available to
us, we could be forced to curtail or cease new investment activities and our net asset value could decline.



The highly competitive market in which we operate may
limit our investment opportunities.



A number of entities compete with us to
make the types of investments that we make. We compete with other BDCs, public and private funds, commercial and investment banks,
commercial financing companies, and, to the extent they provide an alternative form of financing, private equity funds. Additionally,
because competition for investment opportunities generally has increased among alternative investment vehicles, such as hedge funds,
those entities now invest in areas in which they have not traditionally invested. As a result of these new entrants, competition
for investment opportunities intensified over the past several years and may intensify further in the future. Some of our existing
and potential competitors are substantially larger and have considerably greater financial, technical and marketing resources than
we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us.
In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider
a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to
the regulatory restrictions and valuation requirements that the 1940 Act imposes on us as a BDC. We cannot assure you that the
competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations.
Also, as a result of this existing and potentially increasing competition, we may not be able to take advantage of attractive investment
opportunities from time to time, and we can offer no assurance that we will be able to identify and make investments that are consistent
with our investment objective.



We do not seek to compete primarily based
on the interest rates we offer, and we believe that some of our competitors make loans with interest rates that are comparable
to or lower than the rates we offer.



We may lose investment opportunities if
we do not match our competitors’ pricing, terms and structure. If we match our competitors’ pricing, terms and structure,
we may experience decreased net interest income and increased risk of credit loss. As a result of operating in such a competitive
environment, we may make investments that are on better terms to our portfolio companies than what we may have originally anticipated,
which may impact our return on these investments.



Our board of directors may change our operating policies
and strategies without prior notice or stockholder approval.



Our board of directors has the authority
to modify or waive our operating policies and strategies without prior notice and without stockholder approval. We cannot predict
the effect any changes to our current operating policies and strategies would have on our business or operating results. Nevertheless,
the effects could adversely affect our business and impact our ability to make distributions and cause TCPC to lose all or part
of its investment.



Risks related to our investments



Our investments may be risky, and you could lose all or
part of your investment.



We invest primarily in middle-market companies
primarily through leveraged loans.



Risks Associated with middle-market companies.
Investing in private middle-market companies involves a number of significant risks, including:



| | · | these companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26







| | · | they typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                         
| | · | they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on the portfolio company and, in turn, on us;                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                         
| | · | they generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;
| |   |                                                                                                                                                                                                                                                                                                                                                         
| | · | our executive officers, directors and the Advisor may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies;                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                         
| | · | changes in laws and regulations, as well as their interpretations, may adversely affect their respective businesses, financial structures or prospects; and                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                         
| | · | they may have difficulty accessing the capital markets to meet future capital needs.                                                                                                                                                                                                                                                                    



Little public information exists about private
middle-market companies, and we expect to rely on the Advisor’s investment professionals to obtain adequate information to
evaluate the potential returns from investing in these companies. These companies and their financial information are not subject
to the Sarbanes-Oxley Act of 2002 and other rules that govern disclosures and financial controls of public companies. If we are
unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we
may lose money on our investment.



Lower Credit Quality Obligations.
Most of our debt investments are likely to be in lower grade obligations. The lower grade investments in which we invest may be
rated below investment grade by one or more nationally-recognized statistical rating agencies at the time of investment or may
be unrated but determined by the Advisor to be of comparable quality. Debt securities rated below investment grade are commonly
referred to as “junk bonds” and are considered speculative with respect to the issuer’s capacity to pay interest
and repay principal. The debt that we invest in typically is not initially rated by any rating agency, but we believe that if such
investments were rated, they would be below investment grade (rated lower than “Baa3” by Moody’s Investors Service,
lower than “BBB-” by Fitch Ratings or lower than “BBB-” by Standard & Poor’s). We may invest
without limit in debt of any rating, as well as debt that has not been rated by any nationally recognized statistical rating organization.



Investment in lower grade investments involves
a substantial risk of loss. Lower grade securities or comparable unrated securities are considered predominantly speculative with
respect to the issuer’s ability to pay interest and principal and are susceptible to default or decline in market value due
to adverse economic and business developments. The market values for lower grade debt tend to be very volatile and are less liquid
than investment grade securities. For these reasons, the investment in our company is subject to the following specific risks:



| | · | increased price sensitivity to a deteriorating economic environment;                                                                                                                                       
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                            
| | · | greater risk of loss due to default or declining credit quality;                                                                                                                                           
| |   |                                                                                                                                                                                                            
| | · | adverse company specific events are more likely to render the issuer unable to make interest and/or principal payments; and                                                                                
| |   |                                                                                                                                                                                                            
| | · | if a negative perception of the lower grade debt market develops, the price and liquidity of lower grade securities may be depressed. This negative perception could last for a significant period of time.



Adverse changes in economic conditions are
more likely to lead to a weakened capacity of a lower grade issuer to make principal payments and interest payments than an investment
grade issuer. The principal amount of lower grade securities outstanding has proliferated in the past decade as an increasing number
of issuers have used lower grade securities for corporate financing. An economic downturn could severely affect the ability of
highly leveraged issuers to service their debt obligations or to repay their obligations upon maturity. Similarly, downturns in
profitability in specific industries could adversely affect the ability of lower grade issuers in that industry to meet their obligations.
The market values of lower grade debt tend to reflect individual developments of the issuer to a greater extent than do higher
quality investments, which react primarily to fluctuations in the general level of interest rates. Factors having an adverse impact
on the market value of lower grade debt may have an adverse effect on our net asset value and the market value of our common stock.
In addition, we may incur additional expenses to the extent we are required to seek recovery upon a default in payment of principal
of or interest on our portfolio holdings. In certain circumstances, we may be required to foreclose on an issuer’s assets
and take possession of its property or operations. In such circumstances, we would incur additional costs in disposing of such
assets and potential liabilities from operating any business acquired.



27







The secondary market for lower grade debt
is unlikely to be as liquid as the secondary market for more highly rated debt, a factor which may have an adverse effect on our
ability to dispose of a particular instrument. There are fewer dealers in the market for lower grade securities than investment
grade obligations. The prices quoted by different dealers may vary significantly and the spread between the bid and asked price
is generally larger than for higher quality instruments. Under adverse market or economic conditions, the secondary market for
lower grade debt could contract further, independent of any specific adverse changes in the condition of a particular issuer, and
these instruments may become highly illiquid. As a result, we could find it more difficult to sell these instruments or may be
able to sell the securities only at prices lower than if such instruments were widely traded. Prices realized upon the sale of
such lower rated or unrated securities, under these circumstances, may be less than the prices used in calculating our net asset
value.



Since investors generally perceive that
there are greater risks associated with lower grade debt of the type in which we may invest a portion of our assets, the yields
and prices of such debt may tend to fluctuate more than those for higher rated instruments. In the lower quality segments of the
fixed income markets, changes in perceptions of issuers’ creditworthiness tend to occur more frequently and in a more pronounced
manner than do changes in higher quality segments of the income securities market, resulting in greater yield and price volatility.



Distressed Debt Securities Risk.
At times, distressed debt obligations may not produce income and may require us to bear certain extraordinary expenses (including
legal, accounting, valuation and transaction expenses) in order to protect and recover our investment. Therefore, our ability to
achieve current income for our common limited partner may be diminished. We also will be subject to significant uncertainty as
to when and in what manner and for what value the distressed debt we invest in will eventually be satisfied (e.g., through a liquidation
of the obligor’s assets, an exchange offer or plan of reorganization involving the distressed debt securities or a payment
of some amount in satisfaction of the obligation). In addition, even if an exchange offer is made or plan of reorganization is
adopted with respect to distressed debt we hold, there can be no assurance that the securities or other assets received by us in
connection with such exchange offer or plan of reorganization will not have a lower value or income potential than may have been
anticipated when the investment was made. Moreover, any securities received by us upon completion of an exchange offer or plan
of reorganization may be restricted as to resale. As a result of our participation in negotiations with respect to any exchange
offer or plan of reorganization with respect to an issuer of distressed debt, we may be restricted from disposing of such securities.



Payment-in-kind Interest Risk. Our
loans may contain a payment-in-kind, or PIK, interest provision. PIK investments carry additional risk as holders of these types
of securities receive no cash until the cash payment date unless a portion of such securities is sold. If the issuer defaults the
Partnership may obtain no return on its investment. The PIK interest, computed at the contractual rate specified in each loan agreement,
is added to the principal balance of the loan and recorded as interest income. To avoid the imposition of corporate-level tax on
TCPC, this non-cash source of income needs to be paid out to its stockholders in cash distributions or, in the event that it determines
to do so and in certain cases, in shares of its common stock, even though we have not yet collected and may never collect the cash
relating to the PIK interest.



Preferred Stock Risk. To the extent
we invest in preferred securities, there are special risks, including:



Deferral. Preferred securities
may include provisions that permit the issuer, at its discretion, to defer distributions for a stated period without any adverse
consequences to the issuer. If we own a preferred security that is deferring its distributions, we may be required to report income
for tax purposes although we have not yet received such income.



Subordination. Preferred
securities are subordinated to bonds and other debt instruments in a company’s capital structure in terms of priority to
corporate income and liquidation payments, and therefore will be subject to greater credit risk than more senior debt instruments.



Liquidity. Preferred securities
may be substantially less liquid than many other securities, such as common stocks or U.S. Government securities.



Limited Voting Rights.
Generally, preferred security holders have no voting rights with respect to the issuing company unless preferred dividends have
been in arrears for a specified number of periods, at which time the preferred security holders may elect a number of directors
to the issuer’s board. Generally, once all the arrearages have been paid, the preferred security holders no longer have voting
rights.



28







Equity Security Risk. We may have
exposure to equity securities. Although equity securities have historically generated higher average total returns than fixed-income
securities over the long term, equity securities also have experienced significantly more volatility in those returns. The equity
securities that we acquire may fail to appreciate and may decline in value or become worthless.



Hedging Transactions. We may employ hedging techniques
to minimize currency exchange rate risks or interest rate risks, but we can offer no assurance that such strategies will be effective.
If we engage in hedging transactions, we may expose ourselves to risks associated with such transactions. Hedging against a decline
in the values of our portfolio positions does not eliminate the possibility of fluctuations in the values of such positions or
prevent losses if the values of such positions decline. Moreover, it may not be possible to hedge against an exchange rate or interest
rate fluctuation that is so generally anticipated that we are not able to enter into a hedging transaction at an acceptable price.



Economic recessions or downturns could impair our portfolio
companies and harm our operating results.



Over the past several years, the U.S. had
been in a prolonged recessionary period followed by slower than historical rates of GDP growth, and it may return to a recessionary
period or remain in a period of slow growth. Many other economies are currently in a prolonged recessionary period. Although these
conditions have ameliorated to some extent, they could continue for a prolonged period of time or worsen in the future. In addition,
several EU countries continue to face budget issues, some of which may have negative long-term effects for the economies of those
countries and other EU countries. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease
in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to
the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing
investments and harm our operating results.



A portfolio company’s failure to satisfy
financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans
and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s
ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery
upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio companies were
to go bankrupt, even though we or one of our affiliates may have structured our interest in such portfolio company as senior debt,
depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio
company, a bankruptcy court might re-characterize our debt holding as equity and subordinate all or a portion of our claim to claims
of other creditors.



We may not be in a position to exercise control over our
portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.



We do not generally intend to take controlling
equity positions in our portfolio companies. To the extent that we do not hold a controlling equity interest in a portfolio company,
we are subject to the risk that such portfolio company may make business decisions with which we disagree, and the stockholders
and management of such portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the
lack of liquidity for the debt and equity investments that we typically hold in our portfolio companies, we may not be able to
dispose of our investments in the event we disagree with the actions of a portfolio company, and may therefore suffer a decrease
in the value of our investments.



In addition, we may not be in a position
to control any portfolio company by investing in its debt securities. As a result, we are subject to the risk that a portfolio
company in which we invest may make business decisions with which we disagree and the management of such company, as representatives
of the holders of their common equity, may take risks or otherwise act in ways that do not serve our interests as debt investors.



Our portfolio companies may incur debt that ranks equally
with, or senior to, our investments in such companies.



The portfolio companies we invest in usually
have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest. By
their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or
before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the
event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments
ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive
any distribution in respect of our investment. After repaying such senior creditors, such portfolio company may not have any remaining
assets to use for repaying its obligation to us. In the case of debt ranking equally with debt securities in which we invest, we
would have to share any distributions on an equal and ratable basis with other creditors holding such debt in the event of an insolvency,
liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.



29







Additionally, certain loans that we make
to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt of such companies.
The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt
and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing
the loans. The holders of obligations secured by the first priority liens on the collateral will generally control the liquidation
of and be entitled to receive proceeds from any realization of the collateral to repay their obligations in full before us. In
addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability
of buyers and other factors. There can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral
would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations
secured by the first priority liens on the collateral. If such proceeds are not sufficient to repay amounts outstanding under the
loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral,
will only have an unsecured claim against the portfolio company’s remaining assets, if any.



The rights we may have with respect to the
collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the
terms of one or more intercreditor agreements that we enter into with the holders of senior debt. Under such an intercreditor agreement,
at any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that
may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority
liens: the ability to cause the commencement of enforcement proceedings against the collateral; the ability to control the conduct
of such proceedings; the approval of amendments to collateral documents; releases of liens on the collateral; and waivers of past
defaults under collateral documents. We may not have the ability to control or direct such actions, even if our rights are adversely
affected.



We may also make unsecured loans to portfolio
companies, meaning that such loans will not benefit from any interest in collateral of such companies. Liens on such portfolio
companies’ collateral, if any, will secure the portfolio company’s obligations under its outstanding secured debt and
may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements. The
holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from,
any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the
event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be
no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan obligations
after payment in full of all secured loan obligations. If such proceeds were not sufficient to repay the outstanding secured loan
obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against
the portfolio company’s remaining assets, if any.



Our portfolio companies may
prepay loans, which prepayment may reduce stated yields in the future if capital returned cannot be invested in transactions with
equal or greater expected yields.



Certain of the loans we make are prepayable
at any time, some of them of them at no premium to par. We cannot predict when such loans may be prepaid. Whether a loan is prepaid
will depend both on the continued positive performance of the portfolio company and the existence of favorable financing market
conditions that permit such company to replace existing financing with less expensive capital. As market conditions change frequently,
it is unknown when, and if, this may be possible for each portfolio company. In the case of some of these loans, having the loan
prepaid early may reduce the achievable yield for the Partnership in the future below the current yield disclosed for our portfolio
if the capital returned cannot be invested in transactions with equal or greater expected yields.



Our failure to make follow-on investments in our portfolio
companies could impair the value of our portfolio.



Following an initial investment in a portfolio
company, we may make additional investments in that portfolio company as “follow-on” investments in order to: (1) increase
or maintain in whole or in part our equity ownership percentage; (2) exercise warrants, options or convertible securities that
were acquired in the original or subsequent financing; or (3) attempt to preserve or enhance the value of our initial investment.



We may elect not to make follow-on investments
or otherwise lack sufficient funds to make those investments. Our failure to make follow-on investments may, in some circumstances,
jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for
us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment,
we may elect not to make such follow-on investment because we may not want to increase our concentration of risk, because we prefer
other opportunities, because we are inhibited by compliance with BDC requirements or because we desire to maintain our tax status.



30







Our investments in foreign securities may involve significant
risks in addition to the risks inherent in U.S. investments.



Our investment strategy contemplates that
a portion of our investments may be in securities of foreign companies in order to provide diversification or to complement our
U.S. investments, although we are required generally to invest at least 70% of our assets in companies organized and having their
principal place of business within the U.S. and its possessions. Investing in foreign companies may expose us to additional risks
not typically associated with investing in U.S. companies. These risks include changes in exchange control regulations, political
and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is
generally the case in the United States, higher transaction costs, less government supervision of exchanges, brokers and issuers,
less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards
and greater price volatility. These risks may be more pronounced for portfolio companies located or operating primarily in emerging
markets, whose economies, markets and legal systems may be less developed.



Although it is anticipated that most of
our investments will be denominated in U.S. dollars, our investments that are denominated in a foreign currency will be subject
to the risk that the value of a particular currency may change in relation to the U.S. dollar. Among the factors that may affect
currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in
different currencies, long-term opportunities for investment and capital appreciation and political developments. We may employ
hedging techniques to minimize these risks, but we can offer no assurance that we will, in fact, hedge currency risk or, that if
we do, such strategies will be effective. As a result, a change in currency exchange rates may adversely affect our profitability.



Risks related to our operations as a BDC



While our ability to enter into transactions with our
affiliates is restricted under the 1940 Act, we have received an exemptive order from the SEC permitting certain affiliated investments
subject to certain conditions. As a result, the Advisor may face conflicts of interests and investments made pursuant to the exemptive
order conditions could in certain circumstances adversely affect the price paid or received by us or the availability or size of
the position purchased or sold by us.



Any person that owns, directly or indirectly,
5% or more of our outstanding voting securities or is managed by the Advisor will generally be our affiliate for purposes of the
1940 Act and we are generally prohibited from participating in certain transactions such as co-investing with, or buying or selling
any security from or to, such affiliate, absent the prior approval of our independent directors and, in some cases, of the SEC.
However, the Advisor and the funds managed by the Advisor have received an exemption from certain SEC regulations prohibiting transactions
with affiliates. The exemptive order requires that certain procedures be followed prior to making an investment subject to the
order and such procedures could in certain circumstances adversely affect the price paid or received by us or the availability
or size of the position purchased or sold by us. The Advisor may also face conflicts of interest in making investments pursuant
to the exemptive order. See “Risks related to our business — We have limited operating history as a BDC, and if the
Advisor is unable to manage our investments effectively, we may be unable to achieve our investment objective. In addition, the
Advisor may face conflicts in allocating investment opportunities between us and certain other entities that could impact our investment
returns."



The 1940 Act also prohibits certain "joint" transactions
with certain of our affiliates, which could include investments in the same portfolio company (whether at the same or different
times), without prior approval of our independent directors and, in some cases, of the SEC. We are prohibited from buying or selling
any security from or to any person who owns more than 25% of our voting securities and from or to certain of that person's affiliates,
or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC (other than certain limited
situations pursuant to current regulatory guidance). The analysis of whether a particular transaction constitutes a joint transaction
requires a review of the relevant facts and circumstances relating to the particular transaction. Similar restrictions limit our
ability to transact business with our officers or directors or their affiliates.



Regulations governing our operation as a BDC may limit
our ability to, and the way in which we raise additional capital, which could have a material adverse impact on our liquidity,
financial condition and results of operations.



Our business may in the future require a
substantial amount of capital. We may acquire additional capital from the issuance by TCPC of additional shares of its common stock
or from the additional issuance of senior securities (including debt and preferred stock). However, we may not be able to raise
additional capital in the future on favorable terms or at all.



31







TCPC’s board of directors may
decide to issue common stock to finance our operations rather than issuing debt or other senior securities. As a BDC, TCPC is
generally not able to issue its common stock at a price below net asset value without first obtaining required approvals from
its stockholders and its independent directors. If TCPC’s common stock trades at a discount to net asset value, those restrictions
could adversely affect its ability to raise equity capital. Except in connection with the exercise of warrants or the conversion
of convertible securities, in any such case the price at which TCPC’s securities are to be issued and sold may not be less
than a price, that in the determination of its board of directors, closely approximates the market value of such securities at
the relevant time. TCPC may also make rights offerings to its stockholders at prices per share less than the net asset value per
share, subject to the requirements of the 1940 Act. If TCPC raises additional funds by issuing more common stock or senior securities
convertible into, or exchangeable for, its common stock, the percentage ownership of its stockholders at that time would decrease,
and such stockholders may experience dilution.



We and TCPC may only issue senior securities
up to the maximum amount permitted by the 1940 Act. The 1940 Act permits us and TCPC to issue senior securities only in amounts
such that asset coverage, as defined in the 1940 Act, equals at least 200% after such issuance or incurrence. If our assets decline
in value and we or TCPC fail to satisfy this test or any stricter test under the terms of our leverage instruments, we may be required
to liquidate a portion of our investments and repay a portion of our indebtedness at a time when such sales or repayment may be
disadvantageous, which could have a material adverse impact on our liquidity, financial condition and results of operations.



Changes in the laws or regulations governing our business
or the business of our portfolio companies, or changes in the interpretations thereof or newly enacted legislation and regulations,
and any failure by us or our portfolio companies to comply with these laws or regulations, could have a material adverse effect
on our business, results of operations or financial condition of us or our portfolio companies.



We are subject to changing rules and regulations
of federal and state governments, as well as the stock exchange in which our common stock is listed. These entities, including
the Public Company Accounting Oversight Board, the SEC and The Nasdaq Global Select Market, have issued a significant number of
new and increasingly complex requirements and regulations over the course of the last several years and continue to develop additional
regulations.



Changes in the laws or regulations or the
interpretations of the laws and regulations that govern BDCs, RICs or non-depository commercial lenders could significantly affect
our operations and our cost of doing business. We are subject to federal, state and local laws and regulations and are subject
to judicial and administrative decisions that affect our operations, including our loan originations, maximum interest rates, fees
and other charges, disclosures to portfolio companies, the terms of secured transactions, collection and foreclosure procedures
and other trade practices. If these laws, regulations or decisions change, or if we expand our business into jurisdictions that
have adopted more stringent requirements than those in which we currently conduct business, we may have to incur significant expenses
in order to comply, or we might have to restrict our operations. In addition, if we do not comply with applicable laws, regulations
and decisions, we may lose licenses needed for the conduct of our business and may be subject to civil fines and criminal penalties,
any of which could have a material adverse effect upon our business, results of operations of financial condition.



On July 21, 2010, President Obama signed
into law the Dodd-Frank Act. Many of the provisions of the Dodd-Frank Act have extended implementation periods and delayed effective
dates and will require extensive rulemaking by regulatory authorities. While the impact of the Dodd-Frank Act on us and our portfolio
companies may not be known for an extended period of time, the Dodd-Frank Act, including future rules implementing its provisions
and the interpretation of those rules, along with other legislative and regulatory proposals directed at the financial services
industry or affecting taxation that are proposed or pending in the U.S. Congress, may negatively impact the operations, cash flows
or financial condition of us or our portfolio companies, impose additional costs on us or our portfolio companies, intensify the
regulatory supervision of us or our portfolio companies or otherwise adversely affect our business or the business of our portfolio
companies.



If we do not invest a sufficient portion of our assets
in qualifying assets, we could be precluded from investing in certain assets or could be required to dispose of certain assets,
which could have a material adverse effect on our business, financial condition and results of operations.



As a BDC, we are prohibited from acquiring
any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition, at least
70% of our total assets are qualifying assets. As of December 31, 2013, approximately $100.4 million, or approximately 12.6%, of
our total assets were not “qualifying assets.” If we do not invest a sufficient portion of our assets in qualifying
assets, we will be prohibited from investing in additional non-qualifying assets, which could have a material adverse effect on
our business, financial condition and results of operations. Similarly, these rules could prevent us from making follow-on investments
in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments
at inopportune times in order to come into compliance with the 1940 Act. If we need to dispose of these investments quickly, it
may be difficult to dispose of such investments on favorable terms. For example, we may have difficulty in finding a buyer and,
even if a buyer is found, we may have to sell the investments at a substantial loss.



32







There is a risk that you may not receive distributions
or that our distributions may not grow over time and a portion of our distributions may be a return of capital.



We intend to make distributions on a quarterly
basis to our common limited partner out of assets legally available for distribution. We cannot assure you that we will achieve
investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions.
Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this
filing. Due to the asset coverage test applicable to us under the 1940 Act as a BDC, we may be limited in our ability to make distributions.



|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------



None



|Item 2. | Properties
|------- | ----------



We do not own any real estate or other
physical properties materially important to our operation. Our executive offices are located at 2951 28th Street Suite
1000, Santa Monica, CA 90405, and are provided by the Advisor in accordance with the terms of the Administration Agreement. We
believe that our office facilities are suitable and adequate for our business as it is contemplated to be conducted.



|Item 3. | Legal Proceedings
|------- | -----------------



We and the Advisor are not currently subject
to any material pending legal proceedings threatened against us. From time to time, we may be a party to certain legal proceedings
incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies.
While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have
a material effect upon our business, financial condition or results of operations.



|Item 4. | Mine Safety Disclosures
|------- | -----------------------



Not applicable.



33







PART II



Item 5. Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



Not applicable





|Item 6. | Selected Financial Data
|------- | -----------------------



The selected financial and other data
below reflects the historical operations of the Partnership.



The selected financial data below for the
years ended December 31, 2013, 2012, 2011, 2010, and 2009 has been derived from the financial statements that were audited by our
independent registered public accounting firm. This selected financial data should be read in conjunction with our financial statements
and related notes thereto.



|                                           |  | For the Year Ended December 31, |            
|------------------------------------------ |  | ------------------------------- | -----------
|                                           |  | 2013                            |            
|                                           |  |                                 |            
|Performance Data:                          |  |                                 |            
|Interest income                            |  | $                               | 66,979,064 
|Dividend income                            |  |                                 | -          
|Other income                               |  |                                 | 2,629,982  
|Total investment income                    |  |                                 | 69,609,046 
|Interest and credit agreement expenses     |  |                                 | 2,339,447  
|Investment advisory expense                |  |                                 | 8,820,229  
|Other expenses                             |  |                                 | 2,109,147  
|Total expenses                             |  |                                 | 13,268,823 
|Net investment income                      |  |                                 | 56,340,223 
|Realized and unrealized gains (losses)     |  |                                 | 9,071,361  
|Dividends to preferred interest holders    |  |                                 | (1,494,552 
|Net increase in net assets from operations |  | $                               | 63,917,032 
|Assets and Liabilities Data:               |  |                                 |            
|Investments                                |  | $                               | 766,262,959
|Other assets                               |  |                                 | 37,035,750 
|Total assets                               |  |                                 | 803,298,709
|Amount drawn on credit facility            |  |                                 | 95,000,000 
|Other liabilities                          |  |                                 | 21,530,832 
|Total liabilities                          |  |                                 | 116,530,832
|                                           |  |                                 |            
|Preferred limited partnership interest     |  |                                 | 134,504,252
|Net assets                                 |  | $                               | 552,263,625
|Investment Activity Data:                  |  |                                 |            
|No. of portfolio companies at period end   |  |                                 | 67         
|Acquisitions                               |  | $                               | 471,087,319
|Sales, repayments, and other disposals     |  | $                               | 235,641,665
|Weighted-Average Yield at end of period    |  |                                 | 10.9       



34







Item 7.	Management’s Discussion and Analysis
of Financial Condition and Results of Operations



The information contained in this section
should be read in conjunction with our audited financial statements and related notes thereto appearing elsewhere in this annual
report on Form 10-K. For periods prior to April 2, 2012, the consolidated financial statements and related footnotes reflect the
performance of Special Value Continuation Fund, LLC which was formed on July 17, 2006. In addition, some of the statements in this
report (including in the following discussion) constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, which relate to future events or the future performance or financial condition of Special Value
Continuation Partners, LP. (the “Partnership,” “we,” “us,” or “our”). The forward-looking
statements contained in this report involve a number of risks and uncertainties, including statements concerning:



| | · | our, or our portfolio companies’, future business, operations, operating results or prospects;                            
| | - | --------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                           
| | · | the return or impact of current and future investments;                                                                   
| |   |                                                                                                                           
| | · | the impact of a protracted decline in the liquidity of credit markets on our business;                                    
| |   |                                                                                                                           
| | · | the impact of fluctuations in interest rates on our business;                                                             
| |   |                                                                                                                           
| | · | the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;       
| |   |                                                                                                                           
| | · | our contractual arrangements and relationships with third parties;                                                        
| |   |                                                                                                                           
| | · | the general economy and its impact on the industries in which we invest;                                                  
| |   |                                                                                                                           
| | · | the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives;    
| |   |                                                                                                                           
| | · | our expected financings and investments;                                                                                  
| |   |                                                                                                                           
| | · | the adequacy of our financing resources and working capital;                                                              
| |   |                                                                                                                           
| | · | the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;
| |   |                                                                                                                           
| | · | the timing of cash flows, if any, from the operations of our portfolio companies;                                         
| |   |                                                                                                                           
| | · | the timing, form and amount of any dividend distributions; and                                                            
| |   |                                                                                                                           
| | · | our ability to maintain our qualification as a regulated investment company and as a business development company.        



We use words such as “anticipate,”
“believe,” “expect,” “intend,” “will,” “should,” “could,”
“may,” “plan” and similar words to identify forward-looking statements. The forward looking statements
contained in this annual report involve risks and uncertainties. Our actual results could differ materially from those implied
or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in
this report.



We have based the forward-looking statements
included in this report on information available to us on the date of this report, and we assume no obligation to update any such
forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as
a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make
directly to you or through reports that we have filed or in the future may file with the SEC, including annual reports on Form
10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.



35







Overview



The Partnership is a Delaware limited partnership
formed on July 31, 2006 and is an externally managed, closed-end, non-diversified management investment company. On April 2, 2012,
we elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended
(the “1940 Act”) (the “Conversion”). The Partnership’s investment objective is to seek to achieve
high total returns through current income and capital appreciation, with an emphasis on principal protection. The Partnership invests
primarily in the debt of middle-market companies, including senior secured loans, junior loans, mezzanine debt and bonds, either
directly or through its wholly-owned subsidiary, TCPC Funding I, LLC (“TCPC Funding”). Such investments may include
an equity component, and, to a lesser extent, the Partnership may make equity investments directly. TCP Capital Corp. (“TCPC”)
owns 100% of the common limited partner interests of the Partnership. TCPC has also elected to be treated as a BDC under the 1940
Act. The General Partner of the Partnership is SVOF/MM, LLC (“SVOF/MM”), which also serves as the administrator (“Administrator”)
of TCPC and the Partnership. The managing member of SVOF/MM is Tennenbaum Capital Partners, LLC (the “Advisor”), which
serves as the investment manager to both TCPC and the Partnership. Most of the equity interests in the General Partner are owned
directly or indirectly by the Advisor and its employees. The Partnership has elected to be treated as a partnership for U.S. federal
income tax purposes.



Our leverage program is comprised of $116
million in available debt under a senior secured revolving credit facility issued by the Partnership (the “Partnership Facility”),
$100 million in available debt under a senior secured revolving credit facility issued by TCPC Funding, (the “TCPC Funding
Facility,” and, together with the Partnership Facility, the “Revolving Facilities”), and $134 million of outstanding
preferred limited partner interests in the Partnership (the “Preferred Interests,” and, together with the Revolving
Facilities, the “Leverage Program”).



Investments



Our level of investment activity can and
does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available
to middle-market companies, the level of merger and acquisition activity, the general economic environment and the competitive
environment for the types of investments we make.



As a BDC, we are required to comply with
certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying
assets,” including securities and indebtedness of private U.S. companies, public U.S. operating companies whose securities
are not listed on a national securities exchange or registered under the Securities Exchange Act of 1934, as amended, public domestic
operating companies having a market capitalization of less than $250 million, cash, cash equivalents, U.S. government securities
and high-quality debt investments that mature in one year or less. We are also permitted to make certain follow-on investments
in companies that were eligible portfolio companies at the time of initial investment but that no longer meet the definition. As
of December 31, 2013, 87.4% of our total assets were invested in qualifying assets.



Revenues



We generate revenues primarily in the form
of interest on the debt we hold. We also generate revenue from dividends on our equity interests and capital gains on the sale
of warrants and other debt or equity interests that we acquire. Our investments in fixed income instruments generally have an expected
maturity of three to five years, although we have no lower or upper constraint on maturity. Interest on our debt investments is
generally payable quarterly or semi-annually. Payments of principal of our debt investments may be amortized over the stated term
of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments and preferred stock
investments may defer payments of cash interest or dividends or PIK. Any outstanding principal amount of our debt investments and
any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form
of prepayment fees, commitment, origination, structuring or due diligence fees, fees for providing significant managerial assistance,
consulting fees and other investment related income.



Expenses



Our primary operating expenses include the
payment of a base management fee and, depending on our operating results, incentive compensation, expenses reimbursable under the
management agreement, administration fees and the allocable portion of overhead under the administration agreement. The base management
fee and incentive compensation remunerates the Advisor for work in identifying, evaluating, negotiating, closing and monitoring
our investments. Our administration agreement with SVOF/MM, LLC (the “Administrator”) provides that the Administrator
may be reimbursed for costs and expenses incurred by the Administrator for office space rental, office equipment and utilities
allocable to us under the administration agreement, as well as any costs and expenses incurred by the Administrator or its affiliates
relating to any non-investment advisory, administrative or operating services provided by the Administrator or its affiliates to
us. We also bear all other costs and expenses of our operations and transactions, which may include those relating to:



| | · | our organization;                                                                                    
| | - | -----------------------------------------------------------------------------------------------------
| |   |                                                                                                      
| | · | calculating our net asset value (including the cost and expenses of any independent valuation firms);
| |   |                                                                                                      
| | · | interest payable on debt, if any, incurred to finance our investments;                               



36









| | · | the base management fee and any incentive compensation;                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                
| | · | dividends and distributions on our preferred shares, if any;                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                
| | · | administration fees payable under the administration agreement;                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                
| | · | fees payable to third parties relating to, or associated with, making investments;                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                
| | · | transfer agent and custodial fees;                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                
| | · | registration fees;                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                
| | · | director fees and expenses;                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                
| | · | costs of preparing and filing reports or other documents with the SEC;                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                
| | · | costs of any reports, proxy statements or other notices to our common limited partner, including printing costs;                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                
| | · | our fidelity bond;                                                                                                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                
| | · | directors and officers/errors and omissions liability insurance, and any other insurance premiums;                                                                                                                                                                                                             
| |   |                                                                                                                                                                                                                                                                                                                
| | · | indemnification payments;                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                
| | · | direct costs and expenses of administration, including audit and legal costs; and                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                
| | · | all other expenses reasonably incurred by us and the Administrator in connection with administering our business, such as the allocable portion of overhead under the administration agreement, including rent and other allocable portions of the cost of certain of our officers and their respective staffs.



The investment management agreement provides
that the base management fee be calculated at an annual rate of 1.5% of our total assets (excluding cash and cash equivalents)
payable quarterly in arrears. For purposes of calculating the base management fee, “total assets” is determined without
deduction for any borrowings or other liabilities. For the first calendar quarter (or portion thereof) of our operations as a BDC,
the base management fee was calculated based on the initial value of our total assets (excluding cash and cash equivalents) as
of a date as close as practicable to the Conversion. Beginning with our second calendar quarter of operations as a BDC, the base
management fee is calculated based on the value of our total assets (excluding cash and cash equivalents) at the end of the most
recently completed calendar quarter.



Additionally, the investment management
agreement and the Amended and Restated Limited Partnership Agreement provide that the Advisor or its affiliates may be entitled
to incentive compensation under certain circumstances. No incentive compensation was incurred prior to January 1, 2013. Beginning
January 1, 2013, the incentive compensation equals the sum of (1) 20% of all of the ordinary income of TCPC since that
date and (2) 20% of all net realized capital gains (net of any net unrealized capital depreciation) since that date, with
each component being subject to a total return requirement of 8% of TCPC’s contributed common equity annually. The incentive
compensation is payable to the General Partner by the Partnership pursuant to the Amended and Restated Limited Partnership Agreement.
The determination of incentive compensation is subject to limitations under the 1940 Act and the Advisers Act.



Critical accounting policies



Our discussion and analysis of our financial
condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP.
The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters
used in determining such estimates could cause actual results to differ. Management considers the following critical accounting
policies important to understanding the financial statements. In addition to the discussion below, our critical accounting policies
are further described in the notes to our financial statements.



37







Valuation of portfolio
investments



We value our portfolio investments at fair
value based upon the principles and methods of valuation set forth in policies adopted by our board of directors. Fair value is
defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement
date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (i) are
independent of us, (ii) are knowledgeable, having a reasonable understanding about the asset based on all available information
(including information that might be obtained through due diligence efforts that are usual and customary), (iii) are able
to transact for the asset, and (iv) are willing to transact for the asset or liability (that is, they are motivated but not
forced or otherwise compelled to do so).



Investments for which market quotations
are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally
obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers
or market makers. However, short term debt investments with remaining maturities within 90 days are generally valued at amortized
cost, which approximates fair value. Debt and equity securities for which market quotations are not readily available, which is
the case for many of our investments, or for which market quotations are deemed not to represent fair value, are valued at fair
value using a consistently applied valuation process in accordance with our documented valuation policy that has been reviewed
and approved by our board of directors, who also approve in good faith the valuation of such securities as of the end of each quarter.
Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available
market value, the fair value of our investments may differ significantly from the values that would have been used had a readily
available market value existed for such investments and may differ materially from the values that we may ultimately realize. In
addition, changes in the market environment and other events may have differing impacts on the market quotations used to value
some of our investments than on the fair values of our investments for which market quotations are not readily available. Market
quotations may be deemed not to represent fair value in certain circumstances where we believe that facts and circumstances applicable
to an issuer, a seller or purchaser, or the market for a particular security cause current market quotations to not reflect the
fair value of the security. Examples of these events could include cases where a security trades infrequently causing a quoted
purchase or sale price to become stale, where there is a “forced” sale by a distressed seller, where market quotations
vary substantially among market makers, or where there is a wide bid-ask spread or significant increase in the bid-ask spread.



The valuation process adopted by our board
of directors with respect to investments for which market quotations are not readily available or for which market quotations are
deemed not to represent fair value is as follows:



| | · | The investment professionals of the Advisor provide recent portfolio company financial statements and other reporting materials to independent valuation firms approved by our board of directors.                                                                                                                                      
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                         
| | · | Such firms evaluate this information along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented and discussed with senior management of the Advisor.                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                         
| | · | The fair value of smaller investments comprising in the aggregate less than 5% of our total capitalization may be determined by the Advisor in good faith in accordance with our valuation policy without the employment of an independent valuation firm.                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                         
| | · | The audit committee of the board of directors discusses the valuations, and the board of directors approves the fair value of each investment in our portfolio in good faith based on the input of the Advisor, the respective independent valuation firms (to the extent applicable) and the audit committee of the board of directors.



Those investments for which market quotations
are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach,
an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated
by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses
valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The
measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches,
the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among
other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable
market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value
of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets
in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition
comparables, our principal market (as the reporting entity) and enterprise values.



38







When valuing all of our investments,
we strive to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions
that market participants would use in pricing an asset, including assumptions about risk. Inputs may be observable or unobservable.
Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed
based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about
the assumptions market participants would use in pricing an asset or liability developed based on the best information available
in the circumstances.



Our investments may be categorized based
on the types of inputs used in their valuation. The level in the GAAP valuation hierarchy in which an investment falls is based
on the lowest level input that is significant to the valuation of the investment in its entirety. Investments are classified by
GAAP into the three broad levels as follows:



Level 1 — Investments
valued using unadjusted quoted prices in active markets for identical assets.



Level 2 — Investments
valued using other unadjusted observable market inputs, e.g. quoted prices in markets that are not active or quotes for comparable
instruments.



Level 3 — Investments
that are valued using quotes and other observable market data to the extent available, but which also take into consideration one
or more unobservable inputs that are significant to the valuation taken as a whole.



As of December 31, 2013, 0.1% of our investments
were categorized as Level 1, 19.0% were categorized as Level 2, 79.0% were Level 3 investments valued based on valuations
by independent third party sources, and 1.9% were Level 3 investments valued based on valuations by the Advisor.



Determination of fair value involves subjective
judgments and estimates. Accordingly, the notes to our financial statements express the uncertainty with respect to the possible
effect of such valuations, and any change in such valuations, on the financial statements.



Revenue recognition



Interest and dividend income, including
income paid in kind, is recorded on an accrual basis to the extent that such amounts are determined to be collectible. Origination,
structuring, closing, commitment and other upfront fees earned with respect to capital commitments are generally amortized or accreted
into interest income over the life of the respective debt investment. Other fees, including certain amendment fees, prepayment
fees and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income received upon the early
repayment of a loan or debt security are included in interest income.



Certain of our debt investments are purchased
at a considerable discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general
market factors that influence the financial markets as a whole. GAAP generally requires that discounts on the acquisition of corporate
bonds, municipal bonds and treasury bonds be amortized using the effective-interest or constant-yield method. GAAP also requires
that we consider the collectability of interest when making accruals. Accordingly, when accounting for purchase discounts, we recognize
discount accretion income when it is probable that such amounts will be collected.



Net realized gains or
losses and net change in unrealized appreciation or depreciation



We measure realized gains or losses by the
difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to
unrealized appreciation or depreciation previously recognized. Realized gains and losses are computed using the specific identification
method. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting
period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.



Portfolio and investment activity



During the year ended December 31, 2013,
we invested approximately $471.1 million across 34 new and 10 existing portfolio companies. Of these investments, 98% were
in senior secured debt comprised of senior loans ($381.9 million, or 81% of the total) and senior secured notes ($81.9 million,
or 17% of the total). The remaining $7.3 million (2% of the total) were comprised of two equity investments and PIK payments received
on investments in unsecured debt. Additionally, we received approximately $235.6 million in proceeds from sales or repayments of
investments during the year ended December 31, 2013. During the year ended December 31, 2012, we invested approximately $359.0 million
across 28 new and 14 existing portfolio companies. Of these investments, 98% were senior secured debt comprised of senior loans
($312.6 million, or 87% of the total) and senior secured notes ($40.3 million, or 11% of the total). The remaining $6.1 million
(2% of the total) of new investments were in unsecured debt and equity securities. Additionally, we received approximately $211.2 million
in proceeds from sales or repayments of investments during year ended December 31, 2012 respectively.



39







At December 31, 2013, our investment
portfolio of $766.3 million (at fair value) consisted of 67 portfolio companies and was invested 95% in debt investments,
of which 98% was in senior secured debt and 2% in unsecured or subordinated debt. In aggregate, our investment portfolio was invested
76% in senior secured loans, 17% in senior secured notes, 2% in unsecured or subordinated debt, and 5% in equity investments.
Our average portfolio company investment at fair value was approximately $11.4 million. Our largest portfolio company investment
by value was approximately $21.3 million and our five largest portfolio company investments by value comprised approximately
13% of our portfolio at December 31, 2013. At December 31, 2012, our investment portfolio of $517.7 million (at fair value)
consisted of 54 portfolio companies and was invested 93% in debt investments, of which 96% was in senior secured debt and 4% in
unsecured or subordinated debt. In aggregate, our investment portfolio was invested 77% in senior secured loans, 12% in senior
secured notes, 4% in unsecured or subordinated debt, and 7% in equity investments. Our average portfolio company investment at
fair value was approximately $9.6 million. Our largest portfolio company investment by value was approximately $19.4 million
and our five largest portfolio company investments by value comprised approximately 17% of our portfolio at December 31, 2012.



40







The industry composition of our portfolio
at fair value at December 31, 2013 was as follows:



|                                                               |  | Percent of Total |      
|-------------------------------------------------------------- |  | ---------------- | -----
|Industry                                                       |  | Investments      |      
|Software Publishers                                            |  |                  | 7.4  
|Computer Systems Design and Related Services                   |  |                  | 5.6  
|Wireless Telecommunications                                    |  |                  | 4.2  
|Newspaper, Periodical, Book, and Directory Publishers          |  |                  | 4.0  
|Nondepository Credit Intermediation                            |  |                  | 3.3  
|Wired Telecommunications Carriers                              |  |                  | 3.3  
|Professional, Scientific, and Technical Services               |  |                  | 3.2  
|Radio and Television Broadcasting                              |  |                  | 3.2  
|Scheduled Air Transportation                                   |  |                  | 2.9  
|Communications Equipment Manufacturing                         |  |                  | 2.6  
|Nonscheduled Air Transportation                                |  |                  | 2.5  
|Retail                                                         |  |                  | 2.4  
|Scientific Research and Development Services                   |  |                  | 2.3  
|Electric Power Generation, Transmission and Distribution       |  |                  | 2.3  
|Chemical Manufacturing                                         |  |                  | 2.3  
|Advertising, Public Relations, and Related Services            |  |                  | 2.2  
|Business Support Services                                      |  |                  | 2.2  
|Electrical Equipment and Component Manufacturing               |  |                  | 2.1  
|Textile Furnishings Mills                                      |  |                  | 2.1  
|Full-Service Restaurants                                       |  |                  | 2.1  
|Oil and Gas Extraction                                         |  |                  | 2.0  
|Motion Picture and Video Industries                            |  |                  | 2.0  
|Grocery Stores                                                 |  |                  | 2.0  
|Structured Note Funds                                          |  |                  | 2.0  
|Semiconductor and Other Electronic Component Manufacturing     |  |                  | 2.0  
|Architectural, Engineering, and Related Services               |  |                  | 1.9  
|Gaming Industries                                              |  |                  | 1.9  
|Plastics Products Manufacturing                                |  |                  | 1.9  
|Other Telecommunications                                       |  |                  | 1.8  
|Inland Water Transportation                                    |  |                  | 1.7  
|Artificial Synthetic Fibers and Filaments Manufacturing        |  |                  | 1.5  
|Promoters of Performing Arts, Sports, and Similar Events       |  |                  | 1.4  
|Fabricated Metal Product Manufacturing                         |  |                  | 1.4  
|Specialty Hospitals                                            |  |                  | 1.4  
|Satellite Telecommunications                                   |  |                  | 1.3  
|Nonresidential Building Construction                           |  |                  | 1.3  
|Merchant Wholesalers                                           |  |                  | 1.2  
|Computer Equipment Manufacturing                               |  |                  | 1.2  
|Data Processing, Hosting, and Related Services                 |  |                  | 1.1  
|Beverage Manufacturing                                         |  |                  | 1.1  
|Accounting, Tax Preparation, Bookkeeping, and Payroll Services |  |                  | 1.1  
|Petroleum and Coal Products Manufacturing                      |  |                  | 1.0  
|Other                                                          |  |                  | 3.6  
|Total                                                          |  |                  | 100.0



The weighted average effective yield of
the debt securities in our portfolio was 10.9% at December 31, 2013 and 11.3% at December 31, 2012. The weighted average effective
yields on our senior debt and other debt investments were 10.9% and 13.1%, respectively, at December 31, 2013, versus 11.4% and
9.9% at December 31, 2012.



At December 31, 2013, 71.2% of our debt
investments bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and 28.8%
bore interest at fixed rates. The percentage of our floating rate debt investments that bore interest based on an interest rate
floor was 92.1% at December 31, 2013. At December 31, 2012, 63.8% of our debt investments bore interest based on floating rates
and 36.2% bore interest at fixed rates. The percentage of our floating rate debt investments that bore interest based on an interest
rate floor was 95.6% at December 31, 2012.



41







Results of operations



Results of operations through April 2, 2012
reflect a portfolio prior to the Conversion with different investment objectives, and accordingly are not directly comparable to
the same period in 2013.



Investment income



Investment income totaled $69.6 million,
$52.2 million and $54.9 million, respectively, for the years ended December 31, 2013, 2012 and 2011, of which $67.0 million,
$49.3 million and $42.1 million were attributable to interest and fees on our debt investments, $0.0 million, $1.8 million
and $10.6 million to dividends from equity securities, and $2.6 million, $1.1 million and $2.1 million to other income,
respectively. The increase in investment income in the year ended December 31, 2013 compared to the year ended December 31, 2012
reflects an increase in interest income due to the larger investment portfolio and a higher percentage of the portfolio in income-producing
assets in the year ended December 31, 2013 compared to the year ended December 31, 2012 and an increase in other income, offset
somewhat by a decrease in dividend income. The decrease in investment income in the year ended December 31, 2012 compared to the
year ended December 31, 2011 reflects significant dividends received from two equity positions in the year ended December 31, 2011
totaling $10.6 million compared to receipt of $1.8 million in dividends from one equity investment in the year ended December 31,
2012, partially offset by an increase in interest income due to the larger investment portfolio and the higher percentage of the
portfolio in income-producing assets in the year ended December 31, 2012 compared to the year ended December 31, 2011.



Expenses



Total operating expenses for the years ended
December 31, 2013, 2012 and 2011 were $13.3 million, $9.7 million and $9.0 million respectively, comprised of $8.8 million,
$6.9 million and $6.8 million in base management fees, $0.4 million, $1.2 million and $0.2 million in legal and professional
fees (including professional fees related to the Conversion), $1.5 million, $0.4 million and $0.5 million in interest
expense and fees related to the Revolving Facilities, $0.9 million, $0.4 million and $0.4 million in amortization of
debt issuance costs, and $1.7 million, $0.8 million and $1.1 million in other expenses, respectively. The increase in
expenses in the year ended December 31, 2013 compared to the year ended December 31, 2012 primarily reflects the increase in management
fees due to the larger portfolio, the increase in interest expense and fees related to the increase in available and outstanding
debt, and approximately $0.8 million in administration expenses previously waived by the Administrator. The increase in expenses
in the year ended December 31, 2012 compared to the year ended December 31, 2011 primarily reflects $0.4 million in professional
fees relating to the Conversion and an overall increase in ongoing professional fees subsequent to the Conversion.



Net investment income



Net investment income was $56.3 million,
$42.5 million and $45.8 million respectively, for the years ended December 31, 2013, 2012 and 2011. The increase in in net
investment income in the year ended December 31, 2013 compared to the year ended December 31, 2012 primarily reflects the increased
interest income in the year ended December 31, 2013, partially offset by the increase in expenses. The decrease in in net investment
income in the year ended December 31, 2012 compared to the year ended December 31, 2011 primarily reflects the decrease in dividend
income, the increase in professional fees and other expenses, and the excise tax expense, partially offset by the increase in interest
and other income in the year ended December 31, 2012.



Net realized and unrealized gain or
loss



Net realized gains (losses) for the years
ended December 31, 2013, 2012 and 2011 were $(47.4) million, $(16.0) million and $18.1 million respectively. Net realized
losses during the year ended December 31, 2013 were primarily due to a charge of $45.1 million from the tender of all of our shares
of common stock of Bally Total Fitness Holding Corporation ("BTF"). The tender price was slightly higher than the fair
value as of December 31, 2012 and had a de minimis impact on net asset value. This charge was previously included in unrealized
losses at the beginning of the year. The initial BTF investment was acquired at a significant discount as part of our legacy distressed
debt strategy and generated substantial cash interest income.  Additionally, we took a charge of $7.0 million on the recapitalization
of AGY Holding Corp. (“AGY”), a transaction in which we received both new debt and preferred equity in a deleveraged
company. The initial AGY investment was also part of our legacy distressed debt strategy and has generated substantial cash interest
income.  Excluding these charges, net realized gains for the year ended December 31, 2013 were $4.7 million.



The net realized losses during the year
ended December 31, 2012 were due to a charge of $33.8 million on a restructuring of Bulgaria Telecom, $29.3 million of which were
previously included in unrealized losses, and a reorganization charge on one other debt investment of $(5.5) million, partially
offset by a gain of $17.0 million from the sale of International Wire Group Holdings, Inc. equity, and net gains of $6.3 million
primarily from three debt investments. For the years ended December 31, 2013, 2012 and 2011, the change in net unrealized appreciation
or depreciation was $56.5 million, $3.2 million and $(57.0) million, respectively.



42







Dividends to preferred limited partners



Dividends on the Preferred Interests for
the years ended December 31, 2013, 2012 and 2011 were $1.5 million, $1.6 million, and $1.5 million, respectively, as
average LIBOR rates for the three periods were similar.



Net increase or decrease in net assets
allocable to common limited and general partners resulting from operations



The net increase in net assets resulting
from operations was $63.9 million, $28.1 million and $5.4 million for the years ended December 31, 2013, 2012 and 2011,
respectively. The higher net increase in net assets resulting from operations for the year ended December 31, 2013 compared to
the year ended December 31, 2012 primarily reflects the increase in net investment income and the increase in net realized and
unrealized gains. The higher net increase in net assets resulting from operations for the year ended December 31, 2012 compared
to the year ended December 31, 2011 primarily reflects a lower net realized and unrealized loss, partially offset by the decrease
in dividend income.



Liquidity and capital resources



Since our inception, our liquidity and capital
resources have been generated primarily through contributions from the common limited partner of the Partnership (which came from
the initial private placement of common shares of SVCF (the predecessor entity) which were subsequently converted to common stock
of TCPC), the net proceeds from the initial and secondary public offerings of TCPC, draws on our Leverage Program, and cash flows
from operations, including investments sales and repayments and income earned from investments and cash equivalents. The primary
uses of cash have been investments in portfolio companies, cash distributions to our equity holders, payments to service our Leverage
Program and other general corporate purposes.



On May 17, 2013, the Leverage Program was
expanded with the issuance of the TCPC Funding Facility. This facility is a senior secured revolving credit facility, pursuant
to which amounts may be drawn up to $100 million subject to certain collateral and other restrictions. The facility is expandable
to $200 million subject to the consent of the lender and other customary conditions. Amounts outstanding and available under the
combined Leverage Program at December 31, 2013 were as follows:





|                       |  | Rate * |  | Outstanding |             |  | Available |   |             | Total Facility | 
|---------------------- |  | ------ |  | ----------- | ----------- |  | --------- | - | ----------- | -------------- | 
|Partnership Facility   |  | L+44   |  | $           | 45,000,000  |  |           | $ | 71,000,000  |                | 
|TCPC Funding Facility  |  | L+275  |  |             | 50,000,000  |  |           |   | 50,000,000  |                | 
|Preferred Interests    |  | L+85   |  |             | 134,000,000 |  |           |   | -           |                | 
|Total Leverage Program |  |        |  | $           | 229,000,000 |  |           | $ | 121,000,000 |                | 



* Based on either LIBOR or the lender’s cost
of funds, subject to certain limitations.



Net cash used in operating activities during
the year ended December 31, 2013 was $185.9 million. Our primary use of cash in operating activities during this period consisted
of the settlement of acquisitions of investments (net of dispositions) of $232.8 million, partially offset by net investment
income less preferred dividends (net of non-cash income and expenses) of approximately $46.9 million.



Net cash provided by financing activities
was $190.8 million during the year ended December 31, 2013, consisting primarily of $225.2 million in contributions from TCPC
resulting from its follow on offerings, and $21.0 million of net draws under our Revolving Facilities, reduced by $42.9 million
of distributions to TCPC, $7.9 million of distributions of incentive compensation to the General Partner, $1.5 million of
dividends on the Preferred Interests, and payment of $3.1 million in costs related to the issuance of the TCPC Funding Facility.



At December 31, 2013, we had $23.0 million
in cash and cash equivalents.



The Revolving Facilities are secured by
substantially all of the assets in our portfolio, including cash and cash equivalents, and are subject to compliance with customary
affirmative and negative covenants, including the maintenance of a minimum shareholders’ equity, the maintenance of a ratio
of not less than 200% of total assets (less total liabilities other than indebtedness) to the sum of total preferred equity and
indebtedness, and restrictions on certain payments and issuance of debt. Economic conditions, like those that began in 2007 and
which have continued, may result in a decrease in the value of our investments, which would affect both the asset coverage ratios
and the value of the collateral securing the Revolving Facilities, and may therefore impact our ability to borrow under the Revolving
Facilities. In addition to regulatory restrictions that restrict our ability to raise capital, the Leverage Program contains various
covenants which, if not complied with, could accelerate repayment under the Revolving Facilities or require redemption of the Preferred
Interests, thereby materially and adversely affecting our liquidity, financial condition and results of operations. At December
31, 2013, we were in compliance with all financial and operational covenants required by the Leverage Program.



43







Economic conditions, like those that began
in 2007 and which have continued, while creating attractive opportunities for us, may decrease liquidity and raise the cost of
capital generally, which could limit our ability to renew, extend or replace the Leverage Program on terms as favorable as are
currently included therein. If we are unable to renew, extend or replace the Leverage Program upon the various dates of maturity,
we expect to have sufficient funds to repay the outstanding balances in full from our net investment income and sales of, and repayments
of principal from, our portfolio company investments, as well as from anticipated debt and equity capital raises, among other sources.
Economic conditions, like those that began in 2007 and which have continued, may limit our ability to raise capital or the ability
of the companies in which we invest to repay our loans or engage in a liquidity event, such as a sale, recapitalization or initial
public offering. The Partnership Facility matures in July 2016 and the Preferred Interests will be subject to mandatory redemption
in July 2016. The TCPC Funding Facility matures in May 2017. Any inability to renew, extend or replace the Revolving Facilities
or replace the Preferred Interests could adversely impact our liquidity and ability to find new investments or maintain distributions
to our stockholders.



Contractual obligations



In addition to obligations under our Leverage
Program, we have entered into several contracts under which we have future commitments. Pursuant to an investment management agreement,
the Advisor manages our day-to-day operations and provides investment advisory services to us. Payments under the investment management
agreement will be equal to a percentage of the value of our gross assets (excluding cash and cash equivalents) and an incentive
compensation, plus reimbursement of certain expenses incurred by the Advisor. Under our administration agreement, the Administrator
provides us with administrative services, facilities and personnel. Payments under the administration agreement are equal to an
allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to us, and may include
rent and our allocable portion of the cost of certain of our officers and their respective staffs. We are responsible for reimbursing
the Advisor for due diligence and negotiation expenses, fees and expenses of custodians, administrators, transfer and distribution
agents, counsel and directors, insurance, filings and registrations, proxy expenses, expenses of communications to investors, compliance
expenses, interest, taxes, portfolio transaction expenses, costs of responding to regulatory inquiries and reporting to regulatory
authorities, costs and expenses of preparing and maintaining our books and records, indemnification, litigation and other extraordinary
expenses and such other expenses as are approved by the directors as being reasonably related to our organization, offering, capitalization,
operation or administration and any portfolio investments, as applicable. The Advisor is not responsible for any of the foregoing
expenses and such services are not investment advisory services under the 1940 Act. Either party may terminate each of the investment
management agreement and administration agreement without penalty upon not less than 60 days’ written notice to the
other.



Distributions



Distribution to the common limited
partner



Our quarterly distributions to our common
limited partner are recorded on the ex-dividend date and are determined under guidelines established by our board of directors.
Distributions are declared considering our estimate of annual taxable income available for distribution and the amount of taxable
income carried over from the prior year for distribution in the current year. We do not have a policy to pay distributions at a
specific level and expect to continue to distribute substantially all of our taxable income. We cannot assure the common limited
partner that it will receive any distributions or distributions at a particular level.



44







The following table summarizes our distributions
to our common limited partner for the year ended December 31, 2013 and December 31, 2012:



|Date Declared                          |  | TotalAmount |           
|-------------------------------------- |  | ----------- | ----------
|March 7, 2013                          |  | $           | 9,823,476 
|May 8, 2013                            |  |             | 9,988,390 
|August 8, 2013                         |  |             | 10,105,922
|November 7, 2013                       |  |             | 12,933,710
|Total for year ended December 31, 2013 |  | $           | 42,851,498
|                                       |  |             |           
|March 9, 2012                          |  | $           | 5,400,000 
|April 3, 2012                          |  |             | 7,935,515 
|August 9, 2012                         |  |             | 9,042,808 
|November 7, 2012                       |  |             | 8,796,675 
|Total for year ended December 31, 2012 |  | $           | 31,174,998



Distributions to the General Partner



TCPC’s performance during the year
ended December 31, 2013 exceeded the total return threshold; accordingly, incentive compensation of $11.2 million for the year
ended December 31, 2013 was distributable to the General Partner. Pursuant to the terms of the management agreements of TCPC and
the Partnership, no incentive compensation was distributable prior to January 1, 2013. We also allocated a reserve amount of $1.2
million to the account of the General Partner at December 31, 2013 based on the amount of the additional incentive compensation
which would have been distributable to the General Partner had TCPC and the Partnership liquidated at net asset value at December
31, 2013.



Related Parties



We have entered into a number of business
relationships with affiliated or related parties, including the following:



| | • | Each of the Partnership, TCPC, and TCPC Funding has entered into an investment management agreement with the Advisor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | The Administrator provides us with administrative services necessary to conduct our day-to-day operations. For providing these services, facilities and personnel, the Administrator may be reimbursed by us for expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our officers and the Administrator’s administrative staff and providing, at our request and on our behalf, significant managerial assistance to our portfolio companies to which we are required to provide such assistance.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Pursuant to its limited partnership agreement, the general partner of the Partnership is SVOF/MM, LLC. SVOF/MM, LLC is an affiliate of the Advisor and the general partner or managing member of certain other funds managed by the Advisor.                                                                                                                                                                                                                                                                                                                                                                    



The Advisor and its affiliates, employees
and associates currently do and in the future may manage other funds and accounts. The Advisor and its affiliates may determine
that an investment is appropriate for us and for one or more of those other funds or accounts. Accordingly, conflicts may arise
regarding the allocation of investments or opportunities among us and those accounts. In general, the Advisor will allocate investment
opportunities pro rata among us and the other funds and accounts (assuming the investment satisfies the objectives of each) based
on the amount of committed capital each then has available. The allocation of certain investment opportunities in private placements
is subject to independent director approval pursuant to the terms of the co-investment exemptive order applicable to us. In certain
cases, investment opportunities may be made other than on a pro rata basis. For example, we may desire to retain an asset at the
same time that one or more other funds or accounts desire to sell it or we may not have additional capital to invest at a time
the other funds or accounts do. If the Advisor is unable to manage our investments effectively, we may be unable to achieve our
investment objective. In addition, the Advisor may face conflicts in allocating investment opportunities between us and certain
other entities that could impact our investment returns. While our ability to enter into transactions with our affiliates is restricted
under the 1940 Act, we have received an exemptive order from the SEC permitting certain affiliated investments subject to certain
conditions. As a result, we may face conflict of interests and investments made pursuant to the exemptive order conditions which
could in certain circumstances affect adversely the price paid or received by us or the availability or size of the position purchased
or sold by us.



45







Recent Developments



From January 1, 2014 through February
28, 2014, the Partnership has invested approximately $45.4 million in four investments and a $6.25 million commitment with a
combined effective yield of approximately 10.3%.



On February 21, 2014, TCPC filed a report
on Form 8-K announcing the expansion of the TCPC Funding Facility from $100 million in available debt to $150 million in available
debt. The facility’s maturity date was also extended from May 15, 2016 to May 15, 2017 and its interest rate was reduced
from LIBOR plus 2.75% per annum to LIBOR plus 2.50% per annum, subject to certain minimum borrowing requirements. The amendment
is effective March 15, 2014.



On March 6, 2014, TCPC’s
board of directors declared a regular first quarter cash dividend of $0.36 per share payable on March 31, 2014 to stockholders
of record as of the close of business on March 17, 2014.



46







Item 7A:     Quantitative and qualitative
disclosure about market risk



We are subject to financial market risks,
including changes in interest rates. At December 31, 2013, 71.2% of our debt investments bore interest based on floating rates,
such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference
to the current market index after one to six months. At December 31, 2013, the percentage of our floating rate debt investments
that bore interest based on an interest rate floor was 92.1%. Floating rate investments subject to a floor generally reset by reference
to the current market index after one to six months only if the index exceeds the floor.



Interest rate sensitivity refers to the
change in earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with
borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we
borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse
effect on our net investment income.



Based on our December 31, 2013 balance sheet,
the following table shows the annual impact on net income (excluding the related incentive compensation impact) of base rate changes
in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing
structure:



|Basis Point Change    |  | Interest income |            |   | Interest Expense |   |            | Net Income | 
|--------------------- |  | --------------- | ---------- | - | ---------------- | - | ---------- | ---------- | 
|Up 300 basis points   |  | $               | 11,218,688 |   |                  | $ | (6,870,000 | )          | 
|Up 200 basis points   |  | $               | 5,917,639  |   |                  | $ | (4,580,000 | )          | 
|Up 100 basis points   |  | $               | 932,495    |   |                  | $ | (2,290,000 | )          | 
|Down 100 basis points |  | $               | (137,247   | ) |                  | $ | 559,218    |            | 
|Down 200 basis points |  | $               | (137,247   | ) |                  | $ | 559,218    |            | 
|Down 300 basis points |  | $               | (137,247   | ) |                  | $ | 559,218    |            | 



47







|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                         | Page
|-------------------------------------------------------------------------------------------------------- | ----
|                                                                                                         |     
|Report of Independent Registered Public Accounting Firm                                                  | 49  
|                                                                                                         |     
|Consolidated Statements of Assets and Liabilities as of December 31, 2013 and 2012                       | 50  
|                                                                                                         |     
|Consolidated Statements of Investments as of December 31, 2013 and 2012                                  | 51  
|                                                                                                         |     
|Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011               | 63  
|                                                                                                         |     
|Consolidated Statements of Changes in Net Assets for the years ended December 31, 2013, 2012 and 2011    | 64  
|                                                                                                         |     
|Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011               | 66  
|                                                                                                         |     
|Notes to Consolidated Financial Statements                                                               | 67  
|                                                                                                         |     
|Consolidated Schedules of Changes in Investments in Affiliates as of December 31, 2013 and 2012          | 83  
|                                                                                                         |     
|Consolidated Schedules of Restricted Securities of Unaffiliated Issuers as of December 31, 2013 and 2012 | 85  



48









Report of Independent Registered Public
Accounting Firm



The Partners and Board of Directors of

Special Value Continuation Partners, LP



We have audited the accompanying consolidated
statements of assets and liabilities of Special Value Continuation Partners, LP (a Delaware Limited Partnership) (the
Partnership), including the consolidated schedule of investments, as of December 31, 2013 and 2012, and the related consolidated
statements of operations, changes in net assets and cash flows for each of the three years in the period ended December 31, 2013.
Our audits also included the financial statement schedules listed in the Index at Item 15(a). These financial statements and schedules
are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements
and schedules based on our audits.



We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not
engaged to perform an audit of the Partnership’s internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned
as of December 31, 2013, by correspondence with the custodian, loan agents, trustees or management of the underlying investments,
as applicable, or by other appropriate auditing procedures where replies from these parties, as applicable, were not received.
We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements
referred to above present fairly, in all material respects, the consolidated financial position of Special Value Continuation Partners,
LP at December 31, 2013 and 2012, and the consolidated results of its operations, changes in its net assets and its cash flows
for each of the three years in the period ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.
Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly in all material aspects the information set forth therein.



/s/ Ernst & Young LLP

Los Angeles, California

March 6, 2014







49







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statements of Assets
and Liabilities



|                                                                                                                                           |  | December 31, 2013 |              |   | December 31, 2012 |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------------ | - | ----------------- | -
|                                                                                                                                           |  |                   |              |   |                   |  
|Assets                                                                                                                                     |  |                   |              |   |                   |  
|Investments, at fair value:                                                                                                                |  |                   |              |   |                   |  
|Companies less than 5% owned (cost of $684,569,508 and $508,302,758, respectively)                                                         |  | $                 | 678,326,915  |   |                   | $
|Companies 5% to 25% owned (cost of $73,946,547 and $55,803,421, respectively)                                                              |  |                   | 69,068,808   |   |                   |  
|Companies more than 25% owned (cost of $42,588,724 and $44,964,189 respectively)                                                           |  |                   | 18,867,236   |   |                   |  
|Total investments (cost of $801,104,779 and $609,070,368, respectively)                                                                    |  |                   | 766,262,959  |   |                   |  
|                                                                                                                                           |  |                   |              |   |                   |  
|Cash and cash equivalents                                                                                                                  |  |                   | 22,984,182   |   |                   |  
|Accrued interest income:                                                                                                                   |  |                   |              |   |                   |  
|Companies less than 5% owned                                                                                                               |  |                   | 6,282,353    |   |                   |  
|Companies 5% to 25% owned                                                                                                                  |  |                   | 415,061      |   |                   |  
|Companies more than 25% owned                                                                                                              |  |                   | 41,691       |   |                   |  
|Receivable for investments sold                                                                                                            |  |                   | 3,605,964    |   |                   |  
|Deferred debt issuance costs                                                                                                               |  |                   | 2,969,085    |   |                   |  
|Unrealized appreciation on swaps                                                                                                           |  |                   | -            |   |                   |  
|Options (cost $51,750)                                                                                                                     |  |                   | 14,139       |   |                   |  
|Prepaid expenses and other assets                                                                                                          |  |                   | 723,275      |   |                   |  
|Total assets                                                                                                                               |  |                   | 803,298,709  |   |                   |  
|                                                                                                                                           |  |                   |              |   |                   |  
|Liabilities                                                                                                                                |  |                   |              |   |                   |  
|Debt                                                                                                                                       |  |                   | 95,000,000   |   |                   |  
|Payable for investments purchased                                                                                                          |  |                   | 14,706,942   |   |                   |  
|Incentive allocation payable                                                                                                               |  |                   | 3,318,900    |   |                   |  
|Payable to Parent                                                                                                                          |  |                   | 531,717      |   |                   |  
|Interest payable                                                                                                                           |  |                   | 430,969      |   |                   |  
|Unrealized depreciation on swaps                                                                                                           |  |                   | 331,183      |   |                   |  
|Payable to the Investment Manager                                                                                                          |  |                   | 287,371      |   |                   |  
|Accrued expenses and other liabilities                                                                                                     |  |                   | 1,923,750    |   |                   |  
|Total liabilities                                                                                                                          |  |                   | 116,530,832  |   |                   |  
|                                                                                                                                           |  |                   |              |   |                   |  
|Preferred equity facility                                                                                                                  |  |                   |              |   |                   |  
|Series A preferred limited partner interests; $20,000/interest liquidation preference;  6,700 interests authorized, issued and outstanding |  |                   | 134,000,000  |   |                   |  
|Accumulated dividends on Series A preferred equity facility                                                                                |  |                   | 504,252      |   |                   |  
|Total preferred limited partner interests                                                                                                  |  |                   | 134,504,252  |   |                   |  
|                                                                                                                                           |  |                   |              |   |                   |  
|Net assets applicable to common limited and general partners                                                                               |  | $                 | 552,263,625  |   |                   | $
|                                                                                                                                           |  |                   |              |   |                   |  
|Composition of net assets applicable to common limited and general partners                                                                |  |                   |              |   |                   |  
|Paid-in capital                                                                                                                            |  | $                 | 666,530,318  |   |                   | $
|Accumulated net investment income                                                                                                          |  |                   | 26,850,149   |   |                   |  
|Accumulated net realized losses                                                                                                            |  |                   | (105,802,644 | ) |                   |  
|Accumulated net unrealized depreciation                                                                                                    |  |                   | (35,314,198  | ) |                   |  
|Net assets applicable to common limited and general partners                                                                               |  | $                 | 552,263,625  |   |                   | $



See accompanying notes.



50







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated
Statement of Investments



December 31, 2013



Showing Percentage of Total Cash
and Investments of the Partnership



|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   | Percent of  | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                                                                                                     |  | Principal |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                                                                                           |  | Amount    |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Debt Investments (92.05%)                                                                                                                            |  |           |            |  |      |   |            |       |  |   |             | 
|Bank Debt (74.53%) (1)                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Accounting, Tax Preparation, Bookkeeping, and Payroll Services (1.03%)                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Expert Global Solutions, LLC, Senior Secured 1st Lien Term Loan B, LIBOR + 7.25%  (Q), 1.25% LIBOR Floor, due 4/3/18                                 |  | $         | 699,754    |  |      | $ | 701,280    |       |  | $ | 703,691     | 
|Expert Global Solutions, LLC, Senior Secured 2nd Lien Term Loan, LIBOR + 11% (Q), 1.5% LIBOR Floor, due 10/3/18                                      |  | $         | 7,434,877  |  |      |   | 7,228,004  |       |  |   | 7,382,833   | 
|Total Accounting, Tax Preparation, Bookkeeping, and Payroll Services                                                                                 |  |           |            |  |      |   | 7,929,284  |       |  |   | 8,086,524   | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Advertising, Public Relations, and Related Services (2.12%)                                                                                          |  |           |            |  |      |   |            |       |  |   |             | 
|Doubleplay III Limited, Senior Secured 1st Lien Facility A1 Term Loan, EURIBOR +  6.25% (Q), 1.25% EURIBOR Floor, due 3/18/18 - (United Kingdom) (4) |  | $         | 13,165,705 |  |      |   | 16,428,630 |       |  |   | 16,736,606  | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Artificial Synthetic Fibers and Filaments Manufacturing (0.26%)                                                                                      |  |           |            |  |      |   |            |       |  |   |             | 
|AGY Holding Corp., Senior Secured Term Loan, 12%, due 9/15/16 (2)                                                                                    |  | $         | 2,056,927  |  |      |   | 2,056,927  |       |  |   | 2,056,927   | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Business Support Services (1.89%)                                                                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|STG-Fairway Acquisitions, Inc., Senior Secured 2nd Lien Term Loan,  LIBOR + 9.25% (Q), 1.25% LIBOR Floor, due 8/28/19                                |  | $         | 14,643,455 |  |      |   | 13,944,123 |       |  |   | 14,929,002  | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Chemical Manufacturing (2.20%)                                                                                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Archroma, Senior Secured Lien Term Loan B, LIBOR + 8.25% (Q), 1.25% LIBOR Floor,                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|due 9/30/18                                                                                                                                          |  | $         | 17,456,250 |  |      |   | 17,107,125 |       |  |   | 17,401,699  | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Communications Equipment Manufacturing (1.91%)                                                                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Globecomm Systems Inc., Senior Secured 1st Lien Term Loan, LIBOR + 7.625% (Q),  1.25% LIBOR Floor, due 12/11/18 (2)                                  |  | $         | 15,000,000 |  |      |   | 14,850,000 |       |  |   | 15,097,500  | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Computer Equipment Manufacturing (1.15%)                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|ELO Touch Solutions, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 10.5% (Q),                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|1.5% LIBOR Floor, due 12/1/18                                                                                                                        |  | $         | 10,000,000 |  |      |   | 9,666,672  |       |  |   | 9,100,000   | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Converted Paper Products Manufacturing (0.45%)                                                                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Ranpak Corp., Senior Secured 2nd Lien Term Loan, LIBOR + 7.25% (Q),  1.25% LIBOR Floor, due 4/23/20                                                  |  | $         | 3,469,573  |  |      |   | 3,434,877  |       |  |   | 3,573,660   | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Computer Systems Design and Related Services (5.40%)                                                                                                 |  |           |            |  |      |   |            |       |  |   |             | 
|Blue Coat Systems, Inc., Senior Secured 1st Lien Revolver Term Loan, LIBOR + 3.5%  (Q), 1% LIBOR Floor, due 5/31/18                                  |  | $         | 4,500,000  |  |      |   | 3,540,000  |       |  |   | 4,060,800   | 
|Blue Coat Systems, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 8.5% (Q),  1% LIBOR Floor, due 6/28/20                                           |  | $         | 15,000,000 |  |      |   | 14,878,125 |       |  |   | 15,300,000  | 
|OnX Enterprise Solutions, Ltd., Senior Secured 1st Lien Term Loan, LIBOR + 7% (Q),  due 9/3/18 LIBOR + 7% , due 9/3/18                               |  | $         | 10,640,000 |  |      |   | 10,483,300 |       |  |   | 10,709,160  | 
|OnX USA, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 7% (Q), due 9/3/18                                                                          |  | $         | 5,320,000  |  |      |   | 5,244,790  |       |  |   | 5,354,580   | 
|Websense, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 7.25% (Q), 1% LIBOR  Floor, due 12/27/20                                                  |  | $         | 7,200,000  |  |      |   | 7,164,000  |       |  |   | 7,218,000   | 
|Total Computer Systems Design and Related Services                                                                                                   |  |           |            |  |      |   | 41,310,215 |       |  |   | 42,642,540  | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Electric Power Generation, Transmission and Distribution (2.21%)                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Panda Sherman Power, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 7.5% (Q),  1.5% LIBOR Floor, due 9/14/18                                        |  | $         | 11,070,172 |  |      |   | 10,932,474 |       |  |   | 11,402,277  | 
|Panda Temple Power II, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 6% (Q),  1.25% LIBOR Floor, due 4/3/19                                        |  | $         | 5,892,970  |  |      |   | 5,834,041  |       |  |   | 6,069,759   | 
|Total Electric Power Generation, Transmission and Distribution                                                                                       |  |           |            |  |      |   | 16,766,515 |       |  |   | 17,472,036  | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Electrical Equipment and Component Manufacturing (2.08%)                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Palladium Energy, Inc., 1st Lien Senior Secured Term Loan, LIBOR + 9% (Q),  1% LIBOR Floor, due 12/26/17                                             |  | $         | 16,500,317 |  |      |   | 16,225,541 |       |  |   | 16,426,066  | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Financial Investment Activities (0.49%)                                                                                                              |  |           |            |  |      |   |            |       |  |   |             | 
|Marsico Capital Management, Senior Secured 1st Lien Term Loan,  LIBOR + 5% (M), due 12/31/22                                                         |  | $         | 10,637,623 |  |      |   | 13,394,183 |       |  |   | 3,882,732   | 
|                                                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Freight Transportation Arrangement (0.48%)                                                                                                           |  |           |            |  |      |   |            |       |  |   |             | 
|Livingston International, Inc., 2nd Lien Term Loan, LIBOR + 7.75% (Q),  1.25% LIBOR Floor, due 4/18/20                                               |  | $         | 3,665,217  |  |      |   | 3,597,620  |       |  |   | 3,756,848   | 





51







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2013



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                                                               |  |           |            |  |      |   |            |       |  |   | Percent of  | 
|-------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                                                               |  | Principal |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                                                     |  | Amount    |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Debt Investments (continued)                                                                                   |  |           |            |  |      |   |            |       |  |   |             | 
|Full-Service Restaurants (2.04%)                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|RM Holdco, LLC, Subordinated Convertible Term Loan, 1.12% PIK, due 3/21/18 (2)                                 |  | $         | 5,164,796  |  |      | $ | 5,164,796  |       |  | $ | 2,197,621   | 
|RM OpCo, LLC, Convertible 1st Lien Term Loan Tranche B-1,  12% Cash + 7% PIK, due 3/21/16 (2)                  |  | $         | 1,370,199  |  |      |   | 1,339,883  |       |  |   | 1,370,199   | 
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 11%, due 3/21/16 (2)                                |  | $         | 3,626,947  |  |      |   | 3,626,947  |       |  |   | 3,626,947   | 
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B, 12% Cash + 7% PIK,  due 3/21/16 (2)                 |  | $         | 6,825,328  |  |      |   | 6,825,328  |       |  |   | 6,825,328   | 
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B-1, 12% Cash + 7% PIK, due 3/21/16 (2)                |  | $         | 2,150,088  |  |      |   | 2,109,019  |       |  |   | 2,150,088   | 
|Total Full-Service Restaurants                                                                                 |  |           |            |  |      |   | 19,065,973 |       |  |   | 16,170,183  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Gaming Industries (1.87%)                                                                                      |  |           |            |  |      |   |            |       |  |   |             | 
|AP Gaming I, LLC, Senior Secured 1st Lien Term Loan B, LIBOR + 8.25% (Q),  1% LIBOR Floor, due 12/20/20        |  | $         | 15,000,000 |  |      |   | 14,550,000 |       |  |   | 14,737,500  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Grocery Stores (1.91%)                                                                                         |  |           |            |  |      |   |            |       |  |   |             | 
|Bashas, Inc., Senior Secured 1st Lien FILO Term Loan, LIBOR + 9.35% (M), 1.5% LIBOR Floor, due 12/28/15        |  | $         | 14,843,788 |  |      |   | 14,802,168 |       |  |   | 15,066,445  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Inland Water Transportation (1.64%)                                                                            |  |           |            |  |      |   |            |       |  |   |             | 
|US Shipping Corp, Senior Secured 1st Lien Term Loan B, LIBOR + 7.75% (Q),  1.25% LIBOR Floor, due 4/30/18      |  | $         | 12,603,333 |  |      |   | 12,477,300 |       |  |   | 12,965,679  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Insurance Related Activities (0.81%)                                                                           |  |           |            |  |      |   |            |       |  |   |             | 
|Confie Seguros Holding II Co., 2nd Lien Term Loan, LIBOR + 9% (M), 1.25% LIBOR  Floor, due 5/8/19              |  | $         | 6,341,809  |  |      |   | 6,245,733  |       |  |   | 6,391,370   | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Merchant Wholesalers (1.16%)                                                                                   |  |           |            |  |      |   |            |       |  |   |             | 
|Envision Acquisition Company, LLC, 2nd Lien Term Loan, LIBOR + 8.75% (M),  1% LIBOR Floor, due 11/4/21         |  | $         | 9,079,011  |  |      |   | 8,897,430  |       |  |   | 9,192,498   | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Motion Picture and Video Industries (1.97%)                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|CORE Entertainment, Inc., Senior Secured 1st Lien Term Loan, 9%, due 6/21/17                                   |  | $         | 9,462,231  |  |      |   | 9,381,116  |       |  |   | 8,610,631   | 
|CORE Entertainment, Inc., Senior Secured 2nd Lien Term Loan, 13.5%, due 6/21/18                                |  | $         | 7,569,785  |  |      |   | 7,502,054  |       |  |   | 6,858,225   | 
|Total Motion Picture and Video Industries                                                                      |  |           |            |  |      |   | 16,883,170 |       |  |   | 15,468,856  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Newspaper, Periodical, Book, and Directory Publishers (3.90%)                                                  |  |           |            |  |      |   |            |       |  |   |             | 
|Hanley-Wood, LLC, 1st Lien FILO Term Loan, LIBOR + 6.75% (Q),  1.25% LIBOR Floor, due 7/15/18                  |  | $         | 16,707,600 |  |      |   | 16,707,600 |       |  |   | 16,699,246  | 
|MediMedia USA, Inc., 1st Lien Revolver, LIBOR + 6.75% (M), due 5/20/18                                         |  | $         | 4,960,000  |  |      |   | 3,797,500  |       |  |   | 4,523,908   | 
|MediMedia USA, Inc., 1st Lien Term Loan, LIBOR + 6.75% (M), 1.25% LIBOR Floor, due 11/20/18                    |  | $         | 9,701,250  |  |      |   | 9,433,029  |       |  |   | 9,458,719   | 
|Total Newspaper, Periodical, Book, and Directory Publishers                                                    |  |           |            |  |      |   | 29,938,129 |       |  |   | 30,681,873  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Nonresidential Building Construction (1.25%)                                                                   |  |           |            |  |      |   |            |       |  |   |             | 
|NCM Group Holdings, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 11.5% (Q),  1% LIBOR Floor, due 8/29/18    |  | $         | 10,000,000 |  |      |   | 9,620,619  |       |  |   | 9,875,000   | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Nonscheduled Air Transportation (2.24%)                                                                        |  |           |            |  |      |   |            |       |  |   |             | 
|One Sky Flight, LLC, Senior Secured 2nd Lien Term Loan, 12% Cash + 3% PIK, due 5/4/19                          |  | $         | 18,200,000 |  |      |   | 16,929,086 |       |  |   | 17,708,600  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Oil and Gas Extraction (1.98%)                                                                                 |  |           |            |  |      |   |            |       |  |   |             | 
|Willbros Group, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 9.75% (Q), 1.25% LIBOR Floor, due 8/7/19      |  | $         | 15,426,118 |  |      |   | 15,051,713 |       |  |   | 15,657,510  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Other Telecommunications (1.76%)                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Securus Technologies, Inc., 2nd Lien Term Loan, LIBOR + 7.75% (Q), 1.25% LIBOR   Floor, due 4/30/21            |  | $         | 14,000,000 |  |      |   | 13,860,000 |       |  |   | 13,925,660  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Petroleum and Coal Products Manufacturing (0.95%)                                                              |  |           |            |  |      |   |            |       |  |   |             | 
|Boomerang Tube, LLC, 2nd Lien Term Loan, LIBOR + 9.5% (Q), 1.5% LIBOR Floor, due 10/11/17                      |  | $         | 7,749,023  |  |      |   | 7,563,978  |       |  |   | 7,477,807   | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Professional, Scientific, and Technical Services (3.14%)                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Connolly, LLC, Senior Secured 2nd Lien Term Loan, LIBOR + 9.25% (Q), 1.25%  LIBOR Floor, due 7/15/19           |  | $         | 12,000,000 |  |      |   | 11,829,534 |       |  |   | 12,270,000  | 
|ConvergeOne Holdings, 1st Lien Term Loan, LIBOR + 8% (Q), 1.25% LIBOR Floor, due 5/8/19                        |  | $         | 12,654,643 |  |      |   | 12,464,823 |       |  |   | 12,570,236  | 
|Total Professional, Scientific, and Technical Services                                                         |  |           |            |  |      |   | 24,294,357 |       |  |   | 24,840,236  | 
|                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Promoters of Performing Arts, Sports, and Similar Events (1.40%)                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Stadium Management Group, Senior Secured 2nd Lien Term Loan, LIBOR + 9.50% (M), 1.25% LIBOR Floor, due 12/7/18 |  | $         | 11,000,000 |  |      |   | 10,817,390 |       |  |   | 11,055,000  | 







52







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2013



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                                                                             |  |           |            |  |      |   |            |       |  |   | Percent of  | 
|---------------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                                                                             |  | Principal |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                                                                   |  | Amount    |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Debt Investments (continued)                                                                                                 |  |           |            |  |      |   |            |       |  |   |             | 
|Radio and Television Broadcasting (3.09%)                                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|SiTV, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 6% (Q) Cash + 4% PIK,  2% LIBOR Floor, due 8/3/16                     |  | $         | 6,995,124  |  |      | $ | 6,648,634  |       |  | $ | 6,774,778   | 
|The Tennis Channel, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 8.5% (Q), due 5/29/17                                   |  | $         | 17,589,459 |  |      |   | 17,134,705 |       |  |   | 17,615,843  | 
|Total Radio and Television Broadcasting                                                                                      |  |           |            |  |      |   | 23,783,339 |       |  |   | 24,390,621  | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Retail (2.29%)                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Kenneth Cole Productions, Inc., Senior Secured 1st Lien FILO Term Loan,  LIBOR + 10.40% (M), 1% LIBOR Floor, due 9/25/17     |  | $         | 11,272,727 |  |      |   | 11,051,496 |       |  |   | 11,329,090  | 
|Shopzilla, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 9.5% (Q), due 3/31/16                                            |  | $         | 6,710,057  |  |      |   | 6,525,027  |       |  |   | 6,683,216   | 
|Total Retail                                                                                                                 |  |           |            |  |      |   | 17,576,523 |       |  |   | 18,012,306  | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Scheduled Air Transportation (1.60%)                                                                                         |  |           |            |  |      |   |            |       |  |   |             | 
|Aircraft Secured Mortgages - Aircraft Leased to Delta Air Lines, Inc.                                                        |  |           |            |  |      |   |            |       |  |   |             | 
|N913DL, 8%, due 3/15/17 (6)                                                                                                  |  | $         | 289,048    |  |      |   | 289,048    |       |  |   | 296,820     | 
|N918DL, 8%, due 8/15/18 (6)                                                                                                  |  | $         | 388,001    |  |      |   | 388,001    |       |  |   | 397,290     | 
|N954DL, 8%, due 3/20/19 (6)                                                                                                  |  | $         | 514,375    |  |      |   | 514,375    |       |  |   | 524,620     | 
|N955DL, 8%, due 6/20/19 (6)                                                                                                  |  | $         | 533,283    |  |      |   | 533,283    |       |  |   | 543,320     | 
|N956DL, 8%, due 5/20/19 (6)                                                                                                  |  | $         | 532,275    |  |      |   | 532,275    |       |  |   | 542,640     | 
|N957DL, 8%, due 6/20/19 (6)                                                                                                  |  | $         | 537,947    |  |      |   | 537,947    |       |  |   | 548,250     | 
|N959DL, 8%, due 7/20/19 (6)                                                                                                  |  | $         | 543,573    |  |      |   | 543,573    |       |  |   | 553,520     | 
|N960DL, 8%, due 10/20/19 (6)                                                                                                 |  | $         | 564,855    |  |      |   | 564,855    |       |  |   | 574,430     | 
|N961DL, 8%, due 8/20/19(6)                                                                                                   |  | $         | 558,427    |  |      |   | 558,427    |       |  |   | 568,310     | 
|N976DL, 8%, due 2/15/18 (6)                                                                                                  |  | $         | 394,360    |  |      |   | 394,360    |       |  |   | 404,600     | 
|Aircraft Secured Mortgages - Aircraft Leased to United Airlines, Inc.                                                        |  |           |            |  |      |   |            |       |  |   |             | 
|N510UA, 20%, due 10/26/16 (2)                                                                                                |  | $         | 328,848    |  |      |   | 328,848    |       |  |   | 404,605     | 
|N512UA, 20%, due 10/26/16 (2)                                                                                                |  | $         | 334,535    |  |      |   | 334,535    |       |  |   | 414,010     | 
|N536UA, 16%, due 9/29/14 (2)                                                                                                 |  | $         | 108,845    |  |      |   | 108,845    |       |  |   | 114,000     | 
|N545UA, 16%, due 8/29/15 (2)                                                                                                 |  | $         | 249,695    |  |      |   | 249,695    |       |  |   | 275,405     | 
|N585UA, 20%, due 10/25/16 (2)                                                                                                |  | $         | 392,794    |  |      |   | 392,794    |       |  |   | 486,115     | 
|N659UA, 12%, due 2/28/16 (6)                                                                                                 |  | $         | 2,708,150  |  |      |   | 2,708,150  |       |  |   | 2,948,986   | 
|N661UA, 12%, due 5/4/16 (6)                                                                                                  |  | $         | 2,880,186  |  |      |   | 2,880,186  |       |  |   | 3,171,026   | 
|Total Scheduled Air Transportation                                                                                           |  |           |            |  |      |   | 11,859,197 |       |  |   | 12,767,947  | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Semiconductor and Other Electronic Component Manufacturing
    (1.87%)                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Isola USA Corporation, Senior Secured Term Loan B, LIBOR + 8.25% (Q), 1% LIBOR Floor, due 11/29/18                           |  | $         | 14,583,333 |  |      |   | 14,366,560 |       |  |   | 14,729,167  | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Software Publishers (7.13%)                                                                                                  |  |           |            |  |      |   |            |       |  |   |             | 
|BlackLine Systems, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 0.4% (Q)  Cash + 7.6% PIK, 1.5% LIBOR Floor, due 9/25/18 |  | $         | 12,579,747 |  |      |   | 11,811,044 |       |  |   | 12,183,485  | 
|Coreone Technologies, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 3.75% (Q) Cash + 5% PIK, 1% LIBOR Floor, due 9/4/18    |  | $         | 13,556,801 |  |      |   | 13,243,533 |       |  |   | 13,455,125  | 
|Deltek, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 8.75% (Q), 1.25% LIBOR Floor, due 10/10/19                          |  | $         | 15,000,000 |  |      |   | 14,805,253 |       |  |   | 15,300,000  | 
|Edmentum, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 9.75% (Q), 1.5% LIBOR Floor  due 5/17/19                          |  | $         | 15,000,000 |  |      |   | 14,748,486 |       |  |   | 15,112,500  | 
|Total Software Publishers                                                                                                    |  |           |            |  |      |   | 54,608,316 |       |  |   | 56,051,110  | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Specialty Hospitals (0.70%)                                                                                                  |  |           |            |  |      |   |            |       |  |   |             | 
|UBC Healthcare Analytics, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 9% (Q),  1% LIBOR Floor, due 7/1/18               |  | $         | 5,526,021  |  |      |   | 5,498,391  |       |  |   | 5,559,177   | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Textile Furnishings Mills (2.08%)                                                                                            |  |           |            |  |      |   |            |       |  |   |             | 
|Lexmark Carpet Mills, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 10% (Q),  1% LIBOR Floor, due 9/30/18                 |  | $         | 16,351,467 |  |      |   | 15,942,680 |       |  |   | 16,392,346  | 
|                                                                                                                             |  |           |            |  |      |   |            |       |  |   |             | 
|Wired Telecommunications Carriers (1.96%)                                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|Integra Telecom Holdings, Inc., 2nd Lien Term Loan, LIBOR + 8.5% (Q), 1.25% LIBOR Floor,  due 2/22/20                        |  | $         | 15,000,000 |  |      |   | 14,701,027 |       |  |   | 15,459,375  | 





53







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2013



Showing Percentage of Total Cash and Investments
of the Partnership





|                                                                                                                                  |  | Principal |            |  |      |   |             |       |  |   | Percent of  |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ----------- | ----- |  | - | ----------- | -
|                                                                                                                                  |  | Amount or |            |  |      |   |             | Fair  |  |   | Cash and    |  
|Investment                                                                                                                        |  | Shares    |            |  | Cost |   |             | Value |  |   | Investments |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Debt Investments (continued)                                                                                                      |  |           |            |  |      |   |             |       |  |   |             |  
|Wireless Telecommunications Carriers (4.12%)                                                                                      |  |           |            |  |      |   |             |       |  |   |             |  
|Alpheus Communications, LLC, Senior Secured 1st Lien Delayed Draw FILO Term Loan,  LIBOR + 6.92% (Q), 1% LIBOR Floor, due 5/31/18 |  | $         | —          |  |      | $ | (11,183     | )     |  | $ | (8,437      | )
|Alpheus Communications, LLC, Senior Secured 1st Lien FILO Term Loan, LIBOR + 6.92%  (Q), 1% LIBOR Floor, due 5/31/18              |  | $         | 8,248,124  |  |      |   | 8,166,127   |       |  |   | 8,186,263   |  
|Globalive Wireless Management Corp., Senior Secured 1st Lien Term Loan,  LIBOR + 10.9% (Q), due 4/30/14 - (Canada)                |  | $         | 3,037,292  |  |      |   | 2,933,872   |       |  |   | 3,067,665   |  
|Gogo, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 9.75% (Q), 1.5% LIBOR Floor, due 6/21/17                                    |  | $         | 19,587,428 |  |      |   | 18,707,700  |       |  |   | 21,252,360  |  
|Total Wireless Telecommunications Carriers                                                                                        |  |           |            |  |      |   | 29,796,516  |       |  |   | 32,497,851  |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Total Bank Debt                                                                                                                   |  |           |            |  |      |   | 585,841,307 |       |  |   | 588,236,257 |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Other Corporate Debt Securities (17.52%)                                                                                          |  |           |            |  |      |   |             |       |  |   |             |  
|Architectural, Engineering, and Related Services (1.01%)                                                                          |  |           |            |  |      |   |             |       |  |   |             |  
|ESP Holdings, Inc., Junior Unsecured Subordinated Promissory Notes,  6% Cash + 10% PIK, due 12/31/19 (2), (5)                     |  | $         | 7,959,369  |  |      |   | 7,959,369   |       |  |   | 7,959,369   |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Artificial Synthetic Fibers and Filaments Manufacturing (1.17%)                                                                   |  |           |            |  |      |   |             |       |  |   |             |  
|AGY Holding Corporation, Senior Secured 2nd Lien Notes, 11%, due 11/15/16 (2), (5)                                                |  | $         | 9,268,000  |  |      |   | 7,586,317   |       |  |   | 9,268,000   |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Beverage Manufacturing (1.04%)                                                                                                    |  |           |            |  |      |   |             |       |  |   |             |  
|Carolina Beverage Group, LLC, Secured Notes, 10.625%, due 8/1/18 (5)                                                              |  | $         | 7,780,000  |  |      |   | 7,780,000   |       |  |   | 8,207,900   |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Data Processing, Hosting, and Related Services (0.97%)                                                                            |  |           |            |  |      |   |             |       |  |   |             |  
|The Telx Group, Inc., Senior Unsecured Notes, 10% Cash + 2% PIK, due 9/26/19 (5)                                                  |  | $         | 7,098,916  |  |      |   | 6,960,435   |       |  |   | 7,631,335   |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Fabricated Metal Product Manufacturing (1.38%)                                                                                    |  |           |            |  |      |   |             |       |  |   |             |  
|Constellation Enterprises, LLC, Senior Secured 1st Lien Notes, 10.625%, due 2/1/16 (5)                                            |  | $         | 12,500,000 |  |      |   | 12,322,875  |       |  |   | 10,875,000  |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Metal Ore Mining (0.78%)                                                                                                          |  |           |            |  |      |   |             |       |  |   |             |  
|St Barbara Ltd., 1st Priority Senior Secured Notes, 8.875%, due 4/15/18 - (Australia) (5)                                         |  | $         | 7,359,000  |  |      |   | 7,326,651   |       |  |   | 6,144,765   |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Nondepository Credit Intermediation (3.25%)                                                                                       |  |           |            |  |      |   |             |       |  |   |             |  
|Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19 - (Cayman Islands) (5)                                       |  | $         | 10,000,000 |  |      |   | 9,824,072   |       |  |   | 10,700,000  |  
|Trade Finance Funding I, Ltd., Secured Class B Notes, 10.75%, due 11/13/18 (5)                                                    |  | $         | 15,000,000 |  |      |   | 15,000,000  |       |  |   | 14,962,500  |  
|Total Nondepository Credit Intermediation                                                                                         |  |           |            |  |      |   | 24,824,072  |       |  |   | 25,662,500  |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Plastics Products Manufacturing (1.83%)                                                                                           |  |           |            |  |      |   |             |       |  |   |             |  
|Iracore International, Inc., Senior Secured Notes, 9.5%, due 6/1/18 (5)                                                           |  | $         | 13,600,000 |  |      |   | 13,600,000  |       |  |   | 14,426,622  |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Satellite Telecommunications (1.31%)                                                                                              |  |           |            |  |      |   |             |       |  |   |             |  
|Avanti Communications Group, PLC, Senior Secured Notes, 10%, due 10/1/19 (5)                                                      |  | $         | 9,914,000  |  |      |   | 9,914,000   |       |  |   | 10,335,345  |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Scientific Research and Development Services (2.23%)                                                                              |  |           |            |  |      |   |             |       |  |   |             |  
|BPA Laboratories, Inc., Senior Secured Notes, 12.25%, due 4/1/17 (5)                                                              |  | $         | 17,200,000 |  |      |   | 16,536,295  |       |  |   | 17,630,000  |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Specialty Hospitals (0.65%)                                                                                                       |  |           |            |  |      |   |             |       |  |   |             |  
|Vantage Oncology, LLC, Senior Secured Notes, 9.5%, due 6/15/17 (5)                                                                |  | $         | 5,000,000  |  |      |   | 5,000,000   |       |  |   | 5,137,500   |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Structured Note Funds (1.90%)                                                                                                     |  |           |            |  |      |   |             |       |  |   |             |  
|Magnolia Finance V plc, Asset-Backed Credit Linked Notes, 13.125%,  due 8/2/21 - (Cayman Islands) (5)                             |  | $         | 15,000,000 |  |      |   | 15,000,000  |       |  |   | 15,000,000  |  
|Total Other Corporate Debt Securities                                                                                             |  |           |            |  |      |   | 134,810,014 |       |  |   | 138,278,336 |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Total Debt Investments                                                                                                            |  |           |            |  |      |   | 720,651,321 |       |  |   | 726,514,593 |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Equity Securities (5.04%)                                                                                                         |  |           |            |  |      |   |             |       |  |   |             |  
|Architectural, Engineering, and Related Services (0.87%)                                                                          |  |           |            |  |      |   |             |       |  |   |             |  
|ESP Holdings, Inc., Cumulative Preferred 15% (2), (3), (5)                                                                        |  |           | 20,297     |  |      |   | 2,249,930   |       |  |   | 3,947,862   |  
|ESP Holdings, Inc., Common Stock (2), (3), (5)                                                                                    |  |           | 88,670     |  |      |   | 9,311,782   |       |  |   | 2,856,346   |  
|Total Architectural, Engineering, and Related Services                                                                            |  |           |            |  |      |   | 11,561,712  |       |  |   | 6,804,208   |  
|                                                                                                                                  |  |           |            |  |      |   |             |       |  |   |             |  
|Business Support Services (0.22%)                                                                                                 |  |           |            |  |      |   |             |       |  |   |             |  
|STG-Fairway Holdings, LLC, Class A Units (3), (5)                                                                                 |  |           | 841,479    |  |      |   | 1,174,225   |       |  |   | 1,722,508   |  



54









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2013



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                                             |  |        |            |  |      |   |            |       |  |   | Percent of  | 
|-------------------------------------------------------------------------------------------- |  | ------ | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                                             |  |        |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                                   |  | Shares |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Equity Securities (continued)                                                                |  |        |            |  |      |   |            |       |  |   |             | 
|Communications Equipment Manufacturing (0.64%)                                               |  |        |            |  |      |   |            |       |  |   |             | 
|Wasserstein Cosmos Co-Invest, L.P., Limited Partnership Units (2), (3), (5)                  |  |        | 5,000,000  |  |      | $ | 5,000,000  |       |  | $ | 5,000,000   | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Data Processing, Hosting, and Related Services (0.13%)                                       |  |        |            |  |      |   |            |       |  |   |             | 
|Anacomp, Inc., Class A Common Stock (3), (5), (6)                                            |  |        | 1,255,527  |  |      |   | 26,711,048 |       |  |   | 1,004,422   | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Depository Credit Intermediation (0.11%)                                                     |  |        |            |  |      |   |            |       |  |   |             | 
|Doral Financial Corporation, Common Stock - (Puerto Rico) (3)                                |  |        | 53,890     |  |      |   | 11,699,417 |       |  |   | 843,913     | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Financial Investment Activities (0.00%)                                                      |  |        |            |  |      |   |            |       |  |   |             | 
|Marsico Holdings, LLC, Common Interest Units (3), (5)                                        |  |        | 168,698    |  |      |   | 172,694    |       |  |   | 4,302       | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Full-Service Restaurants (0.00%)                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|RM Holdco, LLC, Membership Units (2), (3), (5)                                               |  |        | 13,161,000 |  |      |   | 2,010,777  |       |  |   | -           | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing (0.01%)                |  |        |            |  |      |   |            |       |  |   |             | 
|Precision Holdings, LLC, Class C Membership Interests (3), (5)                               |  |        | 33         |  |      |   | -          |       |  |   | 41,645      | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Nonmetallic Mineral Mining and Quarrying (0.20%)                                             |  |        |            |  |      |   |            |       |  |   |             | 
|EPMC HoldCo, LLC, Membership Units (2), (5)                                                  |  |        | 1,312,720  |  |      |   | -          |       |  |   | 1,562,137   | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Nonscheduled Air Transportation (0.16%)                                                      |  |        |            |  |      |   |            |       |  |   |             | 
|Flight Options Holdings I, Inc., Warrants to Purchase Common Stock (3), (5)                  |  |        | 1,843      |  |      |   | 1,274,000  |       |  |   | 1,268,904   | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Radio and Television Broadcasting (0.04%)                                                    |  |        |            |  |      |   |            |       |  |   |             | 
|SiTV, Inc., Warrants to Purchase Common Stock(3), (5)                                        |  |        | 233,470    |  |      |   | 300,322    |       |  |   | 354,874     | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Retail (0.07%)                                                                               |  |        |            |  |      |   |            |       |  |   |             | 
|Shop Holding, LLC, Class A Units (3), (5)                                                    |  |        | 490,037    |  |      |   | 462,576    |       |  |   | 532,919     | 
|Shop Holding, LLC, Warrants to Purchase Class A Units (3), (5)                               |  |        | 326,691    |  |      |   | -          |       |  |   | 38,258      | 
|Total Electronic Shopping                                                                    |  |        |            |  |      |   | 462,576    |       |  |   | 571,177     | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Scheduled Air Transportation (1.19%)                                                         |  |        |            |  |      |   |            |       |  |   |             | 
|Equipment Trusts - Aircraft Leased to Delta Air Lines, Inc.                                  |  |        |            |  |      |   |            |       |  |   |             | 
|N913DL Trust Beneficial Interests (5), (6)                                                   |  |        | 727        |  |      |   | 97,376     |       |  |   | 125,970     | 
|N918DL Trust Beneficial Interests (5), (6)                                                   |  |        | 623        |  |      |   | 109,938    |       |  |   | 142,970     | 
|N954DL Trust Beneficial Interests (5), (6)                                                   |  |        | 591        |  |      |   | 133,027    |       |  |   | 68,000      | 
|N955DL Trust Beneficial Interests (5), (6)                                                   |  |        | 576        |  |      |   | 133,868    |       |  |   | 113,560     | 
|N956DL Trust Beneficial Interests (5), (6)                                                   |  |        | 580        |  |      |   | 133,907    |       |  |   | 108,800     | 
|N957DL Trust Beneficial Interests (5), (6)                                                   |  |        | 576        |  |      |   | 134,785    |       |  |   | 109,650     | 
|N959DL Trust Beneficial Interests (5), (6)                                                   |  |        | 573        |  |      |   | 135,658    |       |  |   | 110,500     | 
|N960DL Trust Beneficial Interests (5), (6)                                                   |  |        | 563        |  |      |   | 139,173    |       |  |   | 109,650     | 
|N961DL Trust Beneficial Interests (5), (6)                                                   |  |        | 570        |  |      |   | 138,350    |       |  |   | 103,870     | 
|N976DL Trust Beneficial Interests (5), (6)                                                   |  |        | 654        |  |      |   | 113,413    |       |  |   | 103,033     | 
|Equipment Trusts - Aircraft Leased to United Airlines, Inc.                                  |  |        |            |  |      |   |            |       |  |   |             | 
|N510UA Trust Beneficial Interests (2), (5)                                                   |  |        | 54         |  |      |   | 197,409    |       |  |   | 465,625     | 
|N512UA Trust Beneficial Interests (2), (5)                                                   |  |        | 53         |  |      |   | 193,046    |       |  |   | 458,277     | 
|N536UA Trust Beneficial Interests (2), (5)                                                   |  |        | 81         |  |      |   | 396,289    |       |  |   | 656,766     | 
|N545UA Trust Beneficial Interests (2), (5)                                                   |  |        | 67         |  |      |   | 348,071    |       |  |   | 641,840     | 
|N585UA Trust Beneficial Interests (2), (5)                                                   |  |        | 53         |  |      |   | 214,737    |       |  |   | 571,706     | 
|United N659UA-767, LLC (N659UA) (5), (6)                                                     |  |        | 412        |  |      |   | 2,097,640  |       |  |   | 2,840,323   | 
|United N661UA-767, LLC (N661UA) (5), (6)                                                     |  |        | 400        |  |      |   | 2,066,062  |       |  |   | 2,852,677   | 
|Total Scheduled Air Transportation                                                           |  |        |            |  |      |   | 6,782,749  |       |  |   | 9,583,217   | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing (0.08%) |  |        |            |  |      |   |            |       |  |   |             | 
|KAGY Holding Company, Inc., Series A Preferred Stock (2), (3), (5)                           |  |        | 9,778      |  |      |   | 1,091,200  |       |  |   | 662,134     | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Semiconductor and Other Electronic Component Manufacturing (0.03%)                           |  |        |            |  |      |   |            |       |  |   |             | 
|AIP/IS Holdings, LLC, Membership Units (3), (5)                                              |  |        | 352        |  |      |   | -          |       |  |   | 229,504     | 
|                                                                                             |  |        |            |  |      |   |            |       |  |   |             | 
|Software Publishers (0.07%)                                                                  |  |        |            |  |      |   |            |       |  |   |             | 
|SLS Breeze Intermediate Holdings, Inc., Warrants to Purchase Common Stock (3), (5)           |  |        | 1,232,731  |  |      |   | 522,678    |       |  |   | 561,632     | 



55







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2013



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                       |  |        |           |  |      |   |             |       |  |   | Percent of  | 
|---------------------------------------------------------------------- |  | ------ | --------- |  | ---- | - | ----------- | ----- |  | - | ----------- | 
|                                                                       |  |        |           |  |      |   |             | Fair  |  |   | Cash and    | 
|Investment                                                             |  | Shares |           |  | Cost |   |             | Value |  |   | Investments | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Equity Securities (continued)                                          |  |        |           |  |      |   |             |       |  |   |             | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Wired Telecommunications Carriers (1.22%)                              |  |        |           |  |      |   |             |       |  |   |             | 
|Integra Telecom, Inc., Common Stock (3), (5)                           |  |        | 1,274,522 |  |      | $ | 8,433,884   |       |  | $ | 5,583,686   | 
|Integra Telecom, Inc., Warrants (3), (5)                               |  |        | 346,939   |  |      |   | 19,920      |       |  |   | 194,050     | 
|V Telecom Investment S.C.A, Common Shares - (Luxembourg) (3), (4), (5) |  |        | 1,393     |  |      |   | 3,236,256   |       |  |   | 3,756,053   | 
|Total Wired Telecommunications Carriers                                |  |        |           |  |      |   | 11,690,060  |       |  |   | 9,533,789   | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Total Equity Securities                                                |  |        |           |  |      |   | 80,453,458  |       |  |   | 39,748,366  | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Total Investments (7)                                                  |  |        |           |  |      |   | 801,104,779 |       |  |   | 766,262,959 | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Cash and Cash Equivalents (2.91%)                                      |  |        |           |  |      |   |             |       |  |   |             | 
|Wells Fargo & Company, Overnight Repurchase Agreement,
    0.09%       |  |        |           |  |      |   |             |       |  |   |             | 
|Collateralized by Freddie Mac
    Note                                 |  |        |           |  |      |   |             |       |  | $ | 10,501,688  | 
|Union Bank of California, Commercial Paper, 0.10%, due
    1/2/13      |  |        |           |  |      |   |             |       |  |   | 8,499,976   | 
|Cash Denominated in Foreign Currencies                                 |  |        |           |  |      |   |             |       |  |   | 121,389     | 
|Cash Held on Account at Various Institutions                           |  |        |           |  |      |   |             |       |  |   | 3,861,129   | 
|Cash and Cash Equivalents                                              |  |        |           |  |      |   |             |       |  |   | 22,984,182  | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Total Cash and Investments                                             |  |        |           |  |      |   |             |       |  | $ | 789,247,141 | 








Notes to Statement of Investments:



| | (1) | Investments in bank debt generally are bought and sold among institutional investors in transactions not subject to registration
under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the
agent or borrower.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Non-controlled affiliate – as defined under the Investment Company Act of 1940 (ownership of between 5% and 25% of the
outstanding voting securities of this issuer).
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Non-income producing security.
| | --- | ------------------------------



| | (4) | Principal amount denominated in foreign currency. Amortized cost and fair value converted from foreign currency to US dollars.
(See Note 2)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Restricted security. (See Note 2)
| | --- | ---------------------------------



| | (6) | Controlled issuer – as defined under the Investment Company Act of 1940 (ownership of 25% or more of the outstanding
voting securities of this issuer). Investment is not more than 50% owned nor deemed to be a significant subsidiary.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (7) | Includes investments with an aggregate market value of $12,960,000 that have been segregated to collateralize certain unfunded
commitments.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------



LIBOR or EURIBOR resets monthly (M), quarterly (Q), or semiannually
(S).



Aggregate acquisitions and aggregate dispositions of investments,
other than government securities, totaled $471,087,319, and $235,641,665, respectively for the year ended December 31, 2013. Aggregate
acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and
maturities of debt investments. The total value of restricted securities and bank debt as of December 31, 2013 was $765,419,046,
or 97.0% of total cash and investments of the Company.



Options and Swaps at December 31, 2013 were as follows:



|                                                                                 |  | Notional |            |  |            |  
|-------------------------------------------------------------------------------- |  | -------- | ---------- |  | ---------- | -
|Investment                                                                       |  | Amount   |            |  | Fair Value |  
|                                                                                 |  |          |            |  |            |  
|Interest Rate Cap, 4%, expires 5/15/2016                                         |  | $        | 25,000,000 |  |            | $
|Euro/US Dollar Cross-Currency Basis Swap, Pay Euros/Receive USD, Expires 3/31/17 |  | $        | 4,289,019  |  |            | $



See accompanying notes.





56







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments



December 31, 2012



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                                                                               |  |           |            |  |      |   |            |       |  |   | Percent of  | 
|------------------------------------------------------------------------------------------------------------------------------ |  | --------- | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                                                                               |  | Principal |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                                                                     |  | Amount    |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Debt Investments (90.12%)                                                                                                      |  |           |            |  |      |   |            |       |  |   |             | 
|Bank Debt (75.60%) (1)                                                                                                         |  |           |            |  |      |   |            |       |  |   |             | 
|Accounting, Tax Preparation, Bookkeeping, and Payroll Services (3.16%)                                                         |  |           |            |  |      |   |            |       |  |   |             | 
|Expert Global Solutions, LLC, Senior Secured 1st Lien Term Loan B, LIBOR + 6.75%, 1.25% LIBOR Floor, due 4/2/18                |  | $         | 1,916,252  |  |      | $ | 1,882,302  |       |  | $ | 1,925,239   | 
|Expert Global Solutions, LLC, Senior Secured 2nd Lien Term Loan, LIBOR + 9.5%, 1.5% LIBOR Floor, due 10/2/18                   |  | $         | 14,976,011 |  |      |   | 14,493,414 |       |  |   | 14,953,547  | 
|Total Accounting, Tax Preparation, Bookkeeping, and Payroll Services                                                           |  |           |            |  |      |   | 16,375,716 |       |  |   | 16,878,786  | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Business Support Services (3.58%)                                                                                              |  |           |            |  |      |   |            |       |  |   |             | 
|STG-Fairway Acquisitions, Inc., Senior Secured 2nd Lien Term Loan, 12.5%, due 12/29/15                                         |  | $         | 19,878,935 |  |      |   | 18,821,586 |       |  |   | 19,193,112  | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Computer Equipment Manufacturing (1.78%)                                                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|ELO Touch Solutions, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 10.5%, 1.5% LIBOR Floor, due 12/4/18                     |  | $         | 10,000,000 |  |      |   | 9,621,530  |       |  |   | 9,550,000   | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Electric Power Generation, Transmission and Distribution (3.41%)                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Panda Sherman Power, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 7.5%, 1.5% LIBOR Floor, due 9/14/18                       |  | $         | 11,070,172 |  |      |   | 10,910,286 |       |  |   | 11,263,900  | 
|Astoria Generating Company Acquisitions, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 9.35%, 1.5% LIBOR Floor, due 12/28/15 |  | $         | 7,000,000  |  |      |   | 6,727,929  |       |  |   | 7,040,845   | 
|Total Electric Power Generation, Transmission and Distribution                                                                 |  |           |            |  |      |   | 17,638,215 |       |  |   | 18,304,745  | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Electronic Shopping (2.13%)                                                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|Shopzilla, Inc., Senior Secured 2nd Lien Term Loan, 13%, due 6/1/14                                                            |  | $         | 11,382,687 |  |      |   | 10,869,637 |       |  |   | 11,422,526  | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Equipment Rental and Leasing (3.28%)                                                                                           |  |           |            |  |      |   |            |       |  |   |             | 
|Sky Funding AMR Lease Portfolio, Senior Subordinated 1st Lien Term Loan, 10%, due 9/6/16 - (Ireland)                           |  | $         | 17,000,000 |  |      |   | 16,412,490 |       |  |   | 17,595,000  | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Financial Investment Activities (0.02%)                                                                                        |  |           |            |  |      |   |            |       |  |   |             | 
|Marsico Capital Management, Senior Secured 1st Lien Term Loan, LIBOR + 5%, due 12/31/22                                        |  | $         | 11,281,905 |  |      |   | 14,205,420 |       |  |   | 5,753,772   | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Full-Service Restaurants (3.20%)                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 11%, due 3/19/16 (2)                                                |  | $         | 3,759,156  |  |      |   | 3,759,156  |       |  |   | 3,759,156   | 
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B, 12% Cash + 7% PIK, due 3/19/16 (2)                                  |  | $         | 6,258,122  |  |      |   | 6,258,122  |       |  |   | 6,258,122   | 
|RM Holdco, LLC, Subordinated Convertible Term Loan, 1.12% PIK, due 3/21/18 (2)                                                 |  | $         | 5,106,805  |  |      |   | 5,106,805  |       |  |   | 5,106,805   | 
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B-1, 12% Cash + 7% PIK, due 3/19/16 (2)                                |  | $         | 1,976,470  |  |      |   | 1,922,118  |       |  |   | 1,976,470   | 
|Total Full-Service Restaurants                                                                                                 |  |           |            |  |      |   | 17,046,201 |       |  |   | 17,100,553  | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Gaming Industries (5.61%)                                                                                                      |  |           |            |  |      |   |            |       |  |   |             | 
|Golden Gaming, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 7% Cash + 1% PIK, 2% LIBOR Floor, due 4/15/16                  |  | $         | 15,975,628 |  |      |   | 15,600,947 |       |  |   | 15,735,993  | 
|AGS LLC, 1st Lien Term Loan, LIBOR + 10%, 1.5% LIBOR Floor, due 8/15/16                                                        |  | $         | 13,269,231 |  |      |   | 12,781,083 |       |  |   | 13,395,288  | 
|AGS LLC, DDTL 1st Lien Term Loan, LIBOR + 10%, 1.5% LIBOR Floor, due 8/15/16                                                   |  | $         | 865,385    |  |      |   | 796,154    |       |  |   | 881,827     | 
|Total Gaming Industries                                                                                                        |  |           |            |  |      |   | 29,178,184 |       |  |   | 30,013,108  | 
|                                                                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Grocery Stores (2.58%)                                                                                                         |  |           |            |  |      |   |            |       |  |   |             | 
|Bashas, Inc., Senior Secured 1st Lien FILO Term Loan, LIBOR + 9.35%, 1.5% LIBOR Floor, due 12/28/15                            |  | $         | 13,461,182 |  |      |   | 13,461,182 |       |  |   | 13,797,711  | 



57







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2012



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                                                                     |  |           |            |  |      |   |            |       |  |   | Percent of  | 
|-------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                                                                     |  | Principal |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                                                           |  | Amount    |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Debt Investments (continued)                                                                                         |  |           |            |  |      |   |            |       |  |   |             | 
|Insurance Related Activities (1.04%)                                                                                 |  |           |            |  |      |   |            |       |  |   |             | 
|Confie Seguros Holding II Co., 2nd Lien Term Loan, LIBOR + 9%, 1.25% LIBOR Floor, due 7/26/19                        |  | $         | 5,600,000  |  |      | $ | 5,490,103  |       |  | $ | 5,590,676   | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Iron and Steel Mills and Ferroalloy Manufacturing (1.22%)                                                            |  |           |            |  |      |   |            |       |  |   |             | 
|Essar Steel Algoma, Inc., Senior Secured Term Loan, LIBOR + 7.5%, 1.25% LIBOR Floor, due 9/20/14                     |  | $         | 6,581,231  |  |      |   | 6,464,979  |       |  |   | 6,537,367   | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Motion Picture and Video Industries (2.83%)                                                                          |  |           |            |  |      |   |            |       |  |   |             | 
|CORE Entertainment, Inc., Senior Secured 1st Lien Term Loan, 9%, due 6/21/17                                         |  | $         | 9,462,231  |  |      |   | 9,362,125  |       |  |   | 8,220,313   | 
|CORE Entertainment, Inc., Senior Secured 2nd Lien Term Loan, 13.5%, due 6/21/18                                      |  | $         | 7,569,785  |  |      |   | 7,488,038  |       |  |   | 6,964,202   | 
|Total Motion Picture and Video Industries                                                                            |  |           |            |  |      |   | 16,850,163 |       |  |   | 15,184,515  | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Motor Vehicle Parts Manufacturing (2.41%)                                                                            |  |           |            |  |      |   |            |       |  |   |             | 
|DMI SMW Holding Corporation, Term Loan, LIBOR + 7.75%, 1.5% LIBOR Floor, due 12/21/17                                |  | $         | 12,935,000 |  |      |   | 12,938,292 |       |  |   | 12,902,663  | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Other Amusement and Recreation Industries (2.14%)                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|Intrawest Cayman L.P., 1st Lien Term Loan, LIBOR + 5.75%, 1.25% LIBOR Floor, due 12/4/17 - (Cayman Islands)          |  | $         | 1,250,000  |  |      |   | 1,231,250  |       |  |   | 1,257,813   | 
|Intrawest Cayman L.P., 2nd Lien Term Loan, LIBOR + 9.5%, 1.25% LIBOR Floor, due 12/4/18 - (Cayman Islands)           |  | $         | 10,250,000 |  |      |   | 9,993,750  |       |  |   | 10,250,000  | 
|Total Other Amusement and Recreation Industries                                                                      |  |           |            |  |      |   | 11,225,000 |       |  |   | 11,507,813  | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Other Electrical Equipment and Component Manufacturing (3.03%)                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Palladium Energy, Inc., Term Loan, LIBOR + 9%, 1% LIBOR Floor, due 12/21/17                                          |  | $         | 16,500,317 |  |      |   | 16,170,991 |       |  |   | 16,219,812  | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Other Professional, Scientific, and Technical Services (2.27%)                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Connolly, LLC, Senior Secured 2nd Lien Term Loan, LIBOR + 9.25%, 1.25% LIBOR Floor, due 7/26/19                      |  | $         | 12,000,000 |  |      |   | 11,808,454 |       |  |   | 12,157,500  | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Petroleum and Coal Products Manufacturing (1.57%)                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|Boomerang Tube, LLC, 2nd Lien Term Loan, LIBOR + 9.5%, 1.5% LIBOR Floor, due 10/2/17                                 |  | $         | 8,522,741  |  |      |   | 8,277,159  |       |  |   | 8,416,206   | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Pharmaceutical and Medicine Manufacturing (1.51%)                                                                    |  |           |            |  |      |   |            |       |  |   |             | 
|Pharmaceutical Research Associates, Inc., 2nd Lien Term Loan, LIBOR + 9.25%, 1.25% LIBOR Floor, due 6/10/19          |  | $         | 8,000,000  |  |      |   | 7,840,000  |       |  |   | 8,085,000   | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Promoters of Performing Arts, Sports, and Similar Events (2.06%)                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Stadium Management Group, Senior Secured 2nd Lien Term Loan, LIBOR + 9.50%, 1.25% LIBOR Floor, due 12/7/18           |  | $         | 11,000,000 |  |      |   | 10,792,091 |       |  |   | 11,055,000  | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Radio and Television Broadcasting (4.58%)                                                                            |  |           |            |  |      |   |            |       |  |   |             | 
|Encompass Digital Media, Inc., 1st Lien Term Loan, LIBOR + 6.5%, 1.5% LIBOR Floor, due 8/10/17                       |  | $         | 7,940,000  |  |      |   | 7,802,595  |       |  |   | 8,039,250   | 
|Granite Broadcasting Corporation, Senior Secured 1st Lien Term Loan B, LIBOR + 7.25%, 1.25% LIBOR Floor, due 5/23/18 |  | $         | 9,950,000  |  |      |   | 9,719,719  |       |  |   | 9,974,875   | 
|SiTV, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 6% Cash + 4% PIK, 2% LIBOR Floor, due 8/3/16                  |  | $         | 6,806,343  |  |      |   | 6,421,282  |       |  |   | 6,523,880   | 
|Total Radio and Television Broadcasting                                                                              |  |           |            |  |      |   | 23,943,596 |       |  |   | 24,538,005  | 
|                                                                                                                     |  |           |            |  |      |   |            |       |  |   |             | 
|Retail (1.90%)                                                                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Kenneth Cole Productions, Inc., Senior Secured 1st Lien FILO Term Loan, LIBOR + 10.60%, 1% LIBOR Floor, due 9/25/17  |  | $         | 10,000,000 |  |      |   | 9,717,763  |       |  |   | 10,200,000  | 



58







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2012



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                                                           |  |           |            |  |      |   |            |       |  |   | Percent of  | 
|---------------------------------------------------------------------------------------------------------- |  | --------- | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                                                           |  | Principal |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                                                 |  | Amount    |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                                                           |  |           |            |  |      |   |            |       |  |   |             | 
|Debt Investments (continued)                                                                               |  |           |            |  |      |   |            |       |  |   |             | 
|Scheduled Air Transportation (3.11%)                                                                       |  |           |            |  |      |   |            |       |  |   |             | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N913DL), 8%, due 7/15/18 (6)                             |  | $         | 366,557    |  |      | $ | 366,557    |       |  | $ | 367,370     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N918DL), 8%, due 7/15/18 (6)                             |  | $         | 456,613    |  |      |   | 456,613    |       |  |   | 454,580     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N954DL), 8%, due 9/20/19 (6)                             |  | $         | 593,200    |  |      |   | 593,200    |       |  |   | 597,720     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N955DL), 8%, due 9/20/19 (6)                             |  | $         | 609,107    |  |      |   | 609,107    |       |  |   | 612,000     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N956DL), 8%, due 9/20/19 (6)                             |  | $         | 609,360    |  |      |   | 609,360    |       |  |   | 612,850     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N957DL), 8%, due 9/20/19 (6)                             |  | $         | 614,434    |  |      |   | 614,434    |       |  |   | 617,440     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N959DL), 8%, due 9/20/19 (6)                             |  | $         | 619,468    |  |      |   | 619,468    |       |  |   | 622,030     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N960DL), 8%, due 9/20/19 (6)                             |  | $         | 639,631    |  |      |   | 639,631    |       |  |   | 640,730     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N961DL), 8%, due 9/20/19 (6)                             |  | $         | 635,009    |  |      |   | 635,009    |       |  |   | 636,990     | 
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N976DL), 8%, due 7/15/18 (6)                             |  | $         | 474,007    |  |      |   | 474,007    |       |  |   | 473,280     | 
|United Airlines, Inc., Aircraft Secured Mortgage (N510UA), 20%, due 9/26/16 (2)                            |  | $         | 410,410    |  |      |   | 410,410    |       |  |   | 548,340     | 
|United Airlines, Inc., Aircraft Secured Mortgage (N512UA), 20%, due 10/26/16 (2)                           |  | $         | 414,343    |  |      |   | 414,343    |       |  |   | 556,225     | 
|United Airlines, Inc., Aircraft Secured Mortgage (N536UA), 16%, due 8/21/14 (2)                            |  | $         | 251,941    |  |      |   | 251,941    |       |  |   | 277,780     | 
|United Airlines, Inc., Aircraft Secured Mortgage (N545UA), 16%, due 7/17/15 (2)                            |  | $         | 377,925    |  |      |   | 377,925    |       |  |   | 436,810     | 
|United Airlines, Inc., Aircraft Secured Mortgage (N585UA), 20%, due 10/25/16 (2)                           |  | $         | 486,501    |  |      |   | 486,501    |       |  |   | 653,220     | 
|United Airlines, Inc., Aircraft Secured Mortgage (N659UA), 12%, due 3/28/16 (6)                            |  | $         | 3,707,430  |  |      |   | 3,707,430  |       |  |   | 4,264,148   | 
|United Airlines, Inc., Aircraft Secured Mortgage (N661UA), 12%, due 5/4/16 (6)                             |  | $         | 3,849,284  |  |      |   | 3,849,284  |       |  |   | 4,351,424   | 
|                                                                                                           |  |           |            |  |      |   | 15,115,220 |       |  |   | 16,722,937  | 
|Semiconductor and Other Electronic Component Manufacturing (2.61%)                                         |  |           |            |  |      |   |            |       |  |   |             | 
|Isola USA Corporation, 1st Lien Term Loan, LIBOR + 8%, 2% LIBOR Floor, due 9/29/15                         |  | $         | 14,000,000 |  |      |   | 13,975,000 |       |  |   | 14,000,000  | 
|                                                                                                           |  |           |            |  |      |   |            |       |  |   |             | 
|Software Publishers (8.47%)                                                                                |  |           |            |  |      |   |            |       |  |   |             | 
|Blackboard, Inc., Senior Secured 1st Lien Term Loan, LIBOR + 6%, 1.5% LIBOR Floor, due 10/4/18             |  | $         | 2,671,613  |  |      |   | 2,457,884  |       |  |   | 2,705,008   | 
|Deltek, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 8.75%, 1.25% LIBOR Floor, due 10/10/19            |  | $         | 15,000,000 |  |      |   | 14,781,719 |       |  |   | 15,275,025  | 
|Edmentum, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 9.75%, 1.5% LIBOR Floor due 5/8/19              |  | $         | 15,000,000 |  |      |   | 14,717,168 |       |  |   | 14,831,250  | 
|SumTotal Systems, LLC, Senior Secured 2nd Lien Term Loan, LIBOR + 9%, 1.25% LIBOR Floor, due 5/13/19       |  | $         | 7,600,000  |  |      |   | 7,449,234  |       |  |   | 7,524,000   | 
|The TriZetto Group, Inc., Senior Secured 2nd Lien Term Loan, LIBOR + 7.25%, 1.25% LIBOR Floor, due 3/28/19 |  | $         | 5,000,000  |  |      |   | 4,927,523  |       |  |   | 4,979,175   | 
|Total Software Publishers                                                                                  |  |           |            |  |      |   | 44,333,528 |       |  |   | 45,314,458  | 
|                                                                                                           |  |           |            |  |      |   |            |       |  |   |             | 
|Support Activities for Mining (0.06%)                                                                      |  |           |            |  |      |   |            |       |  |   |             | 
|Trico Shipping AS, 1st Lien Term Loan A, LIBOR + 8.5%, 1.5% LIBOR Floor, due 5/13/14 - (Norway)            |  | $         | 228,803    |  |      |   | 228,803    |       |  |   | 228,803     | 
|Trico Shipping AS, 1st Lien Term Loan B, LIBOR + 8.5%, 1.5% LIBOR Floor, due 5/13/14 - (Norway)            |  | $         | 80,543     |  |      |   | 80,543     |       |  |   | 80,543      | 
|Total Support Activities for Mining                                                                        |  |           |            |  |      |   | 309,346    |       |  |   | 309,346     | 
|                                                                                                           |  |           |            |  |      |   |            |       |  |   |             | 
|Wired Telecommunications Carriers (2.52%)                                                                  |  |           |            |  |      |   |            |       |  |   |             | 
|Bulgaria Telecom Company AD, 1st Lien Facility 1A Term Loan, EURIBOR + 5.5%, due 11/9/17 - (Bulgaria) (4)  |  | €         | 3,262,515  |  |      |   | 3,525,355  |       |  |   | 3,744,685   | 
|Integra Telecom Holdings, Inc., 1st Lien Term Loan, LIBOR + 7.25%, 2% LIBOR Floor, due 4/15/15             |  | $         | 8,477,489  |  |      |   | 8,070,172  |       |  |   | 8,518,096   | 
|Viva Telecom Bulgaria EAD, 1st Lien Facility 1B Term Loan, EURIBOR + 5.5%, due 11/9/17 - (Luxembourg) (4)  |  | €         | 980,713    |  |      |   | 1,059,723  |       |  |   | 1,125,653   | 
|Total Wired Telecommunications Carriers                                                                    |  |           |            |  |      |   | 12,655,250 |       |  |   | 13,388,434  | 



59







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2012



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                                                             |  |           |            |  |      |   |             |       |  |   | Percent of  | 
|------------------------------------------------------------------------------------------------------------ |  | --------- | ---------- |  | ---- | - | ----------- | ----- |  | - | ----------- | 
|                                                                                                             |  | Principal |            |  |      |   |             | Fair  |  |   | Cash and    | 
|Investment                                                                                                   |  | Amount    |            |  | Cost |   |             | Value |  |   | Investments | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Debt Investments (continued)                                                                                 |  |           |            |  |      |   |             |       |  |   |             | 
|Wireless Telecommunications Carriers (0.56%)                                                                 |  |           |            |  |      |   |             |       |  |   |             | 
|Globalive Wireless Management Corp., Senior Secured 1st Lien Term Loan, LIBOR + 8.9%, due 10/9/12 - (Canada) |  | $         | 3,037,292  |  |      | $ | 2,933,872   |       |  | $ | 3,000,845   | 
|Gogo, LLC, Senior Secured 1st Lien Term Loan, LIBOR + 9.75%, 1.5% LIBOR Floor, due 6/21/17                   |  | $         | 10,168,765 |  |      |   | 9,762,014   |       |  |   | 10,270,452  | 
|Total Wireless Telecommunications                                                                            |  |           |            |  |      |   | 12,695,886  |       |  |   | 13,271,297  | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Total Bank Debt                                                                                              |  |           |            |  |      |   | 404,232,982 |       |  |   | 405,010,342 | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Other Corporate Debt Securities (14.51%)                                                                     |  |           |            |  |      |   |             |       |  |   |             | 
|Architectural, Engineering, and Related Services (1.33%)                                                     |  |           |            |  |      |   |             |       |  |   |             | 
|ESP Holdings, Inc., Junior Unsecured Subordinated Promissory Notes, 6% Cash + 10% PIK, due 12/31/19 (2), (5) |  | $         | 7,209,840  |  |      |   | 7,209,840   |       |  |   | 7,134,137   | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Artificial Synthetic Fibers and Filaments Manufacturing (1.72%)                                              |  |           |            |  |      |   |             |       |  |   |             | 
|AGY Holding Corporation, Senior Secured 2nd Lien Notes, 11%, due 11/15/14                                    |  | $         | 18,536,000 |  |      |   | 15,172,634  |       |  |   | 9,221,660   | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Data Processing, Hosting, and Related Services (1.34%)                                                       |  |           |            |  |      |   |             |       |  |   |             | 
|The Telx Group, Inc., Senior Unsecured Notes, 10% Cash + 2% PIK, due 9/26/19 (5)                             |  | $         | 6,958,697  |  |      |   | 6,820,215   |       |  |   | 7,167,458   | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Metal and Mineral (except Petroleum) Merchant Wholesalers (2.48%)                                            |  |           |            |  |      |   |             |       |  |   |             | 
|Constellation Enterprises, LLC, Senior Secured 1st Lien Notes, 10.625%, due 2/1/16 (5)                       |  | $         | 12,500,000 |  |      |   | 12,322,875  |       |  |   | 13,296,875  | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Nondepository Credit Intermediation (1.87%)                                                                  |  |           |            |  |      |   |             |       |  |   |             | 
|Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19 (5)                                     |  | $         | 10,000,000 |  |      |   | 9,803,494   |       |  |   | 10,037,500  | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Nonferrous Metal Production and Processing (2.88%)                                                           |  |           |            |  |      |   |             |       |  |   |             | 
|International Wire Group Holdings, Inc., Senior Secured Notes, 8.5%, due 10/15/17 (2), (5)                   |  | $         | 15,000,000 |  |      |   | 15,000,000  |       |  |   | 15,450,000  | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Scientific Research and Development Services (2.89%)                                                         |  |           |            |  |      |   |             |       |  |   |             | 
|BPA Laboratories, Inc., Senior Secured Notes, 12.25%, due 4/1/17 (5)                                         |  | $         | 17,110,000 |  |      |   | 16,446,295  |       |  |   | 15,484,550  | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Total Other Corporate Debt Securities                                                                        |  |           |            |  |      |   | 82,775,353  |       |  |   | 77,792,180  | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Total Debt Investments                                                                                       |  |           |            |  |      |   | 487,008,335 |       |  |   | 482,802,522 | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Equity Securities (6.51%)                                                                                    |  |           |            |  |      |   |             |       |  |   |             | 
|Other Amusement and Recreation Industries (0.01%)                                                            |  |           |            |  |      |   |             |       |  |   |             | 
|Bally Total Fitness Holding Corporation, Common Stock (3), (5)                                               |  |           | 6,058      |  |      |   | 45,186,963  |       |  |   | 27,746      | 
|Bally Total Fitness Holding Corporation, Warrants (3), (5)                                                   |  |           | 10,924     |  |      |   | -           |       |  |   | 1           | 
|Total Other Amusement and Recreation Industries                                                              |  |           |            |  |      |   | 45,186,963  |       |  |   | 27,747      | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Architectural, Engineering, and Related Services (1.10%)                                                     |  |           |            |  |      |   |             |       |  |   |             | 
|ESP Holdings, Inc., Cumulative Preferred 15% (2), (3), (5)                                                   |  |           | 20,297     |  |      |   | 2,249,930   |       |  |   | 3,643,088   | 
|ESP Holdings, Inc., Common Stock (2), (3), (5)                                                               |  |           | 88,670     |  |      |   | 9,311,782   |       |  |   | 2,263,124   | 
|Total Architectural, Engineering, and Related Services                                                       |  |           |            |  |      |   | 11,561,712  |       |  |   | 5,906,212   | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Business Support Services (0.05%)                                                                            |  |           |            |  |      |   |             |       |  |   |             | 
|STG-Fairway Holdings, LLC, Class A Units (3), (5)                                                            |  |           | 80,396     |  |      |   | 1,100,348   |       |  |   | 241,188     | 
|                                                                                                             |  |           |            |  |      |   |             |       |  |   |             | 
|Data Processing, Hosting, and Related Services (0.23%)                                                       |  |           |            |  |      |   |             |       |  |   |             | 
|Anacomp, Inc., Class A Common Stock (3), (5), (6)                                                            |  |           | 1,255,527  |  |      |   | 26,711,048  |       |  |   | 1,255,527   | 



60







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2012



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                              |  |        |            |  |      |   |            |       |  |   | Percent of  | 
|----------------------------------------------------------------------------- |  | ------ | ---------- |  | ---- | - | ---------- | ----- |  | - | ----------- | 
|                                                                              |  |        |            |  |      |   |            | Fair  |  |   | Cash and    | 
|Investment                                                                    |  | Shares |            |  | Cost |   |            | Value |  |   | Investments | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Equity Securities (continued)                                                 |  |        |            |  |      |   |            |       |  |   |             | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Depository Credit Intermediation (0.15%)                                      |  |        |            |  |      |   |            |       |  |   |             | 
|Doral Financial Corporation, Common Stock (3)                                 |  |        | 1,077,795  |  |      | $ | 11,699,417 |       |  | $ | 780,431     | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Electric Power Generation, Transmission and Distribution (0.01%)              |  |        |            |  |      |   |            |       |  |   |             | 
|La Paloma Residual Bank Debt Claim (3), (5)                                   |  |        | 1,830,453  |  |      |   | 1,574,284  |       |  |   | 51,253      | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Electronic Shopping (0.21%)                                                   |  |        |            |  |      |   |            |       |  |   |             | 
|Shop Holding, LLC, Class A Units (3), (5)                                     |  |        | 490,037    |  |      |   | 462,576    |       |  |   | 915,198     | 
|Shop Holding, LLC, Warrants to Purchase Class A Units (3), (5)                |  |        | 326,691    |  |      |   | -          |       |  |   | 283,346     | 
|Total Electronic Shopping                                                     |  |        |            |  |      |   | 462,576    |       |  |   | 1,198,544   | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Financial Investment Activities (0.02%)                                       |  |        |            |  |      |   |            |       |  |   |             | 
|Marsico Holdings, LLC, Common Interest Units (3), (5)                         |  |        | 168,698    |  |      |   | 172,694    |       |  |   | 84,349      | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Full-Service Restaurants (0.16%)                                              |  |        |            |  |      |   |            |       |  |   |             | 
|RM Holdco, LLC, Membership Units (2), (3), (5)                                |  |        | 13,161,000 |  |      |   | 2,010,777  |       |  |   | 849,478     | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing (0.00%) |  |        |            |  |      |   |            |       |  |   |             | 
|Precision Holdings, LLC, Class C Membership Interests (3), (5)                |  |        | 33         |  |      |   | 1,396      |       |  |   | 21,317      | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Nonmetallic Mineral Mining and Quarrying (0.51%)                              |  |        |            |  |      |   |            |       |  |   |             | 
|EPMC HoldCo, LLC, Membership Units (2), (5)                                   |  |        | 1,312,720  |  |      |   | -          |       |  |   | 2,730,458   | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Radio and Television Broadcasting (0.06%)                                     |  |        |            |  |      |   |            |       |  |   |             | 
|SiTV, Inc., Warrants to Purchase Common Stock (3), (5)                        |  |        | 233,470    |  |      |   | 300,322    |       |  |   | 336,197     | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Scheduled Air Transportation (1.83%)                                          |  |        |            |  |      |   |            |       |  |   |             | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N913DL) (5), (6) |  |        | 466        |  |      |   | 113,899    |       |  |   | 111,520     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N918DL) (5), (6) |  |        | 433        |  |      |   | 130,664    |       |  |   | 120,530     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N954DL) (5), (6) |  |        | 421        |  |      |   | 161,952    |       |  |   | 113,390     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N955DL) (5), (6) |  |        | 417        |  |      |   | 164,481    |       |  |   | 160,650     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N956DL) (5), (6) |  |        | 418        |  |      |   | 164,726    |       |  |   | 163,200     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N957DL) (5), (6) |  |        | 417        |  |      |   | 165,755    |       |  |   | 163,880     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N959DL) (5), (6) |  |        | 416        |  |      |   | 166,778    |       |  |   | 164,390     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N960DL) (5), (6) |  |        | 412        |  |      |   | 171,075    |       |  |   | 169,660     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N961DL) (5), (6) |  |        | 415        |  |      |   | 170,315    |       |  |   | 171,360     | 
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N976DL) (5), (6) |  |        | 442        |  |      |   | 136,326    |       |  |   | 83,300      | 
|United Airlines, Inc., Equipment Trust Beneficial Interests (N510UA) (2), (5) |  |        | 43         |  |      |   | 151,759    |       |  |   | 479,682     | 
|United Airlines, Inc., Equipment Trust Beneficial Interests (N512UA) (2), (5) |  |        | 43         |  |      |   | 148,561    |       |  |   | 473,761     | 
|United Airlines, Inc., Equipment Trust Beneficial Interests (N536UA) (2), (5) |  |        | 62         |  |      |   | 298,394    |       |  |   | 624,746     | 
|United Airlines, Inc., Equipment Trust Beneficial Interests (N545UA) (2), (5) |  |        | 52         |  |      |   | 267,249    |       |  |   | 616,897     | 
|United Airlines, Inc., Equipment Trust Beneficial Interests (N585UA) (2), (5) |  |        | 43         |  |      |   | 167,806    |       |  |   | 583,391     | 
|United N659UA-767, LLC (N659UA) (5), (6)                                      |  |        | 312        |  |      |   | 1,773,072  |       |  |   | 2,771,428   | 
|United N661UA-767, LLC (N661UA) (5), (6)                                      |  |        | 303        |  |      |   | 1,759,997  |       |  |   | 2,789,809   | 
|Total Scheduled Air Transportation                                            |  |        |            |  |      |   | 6,112,809  |       |  |   | 9,761,594   | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Semiconductor and Other Electronic Component Manufacturing (0.01%)            |  |        |            |  |      |   |            |       |  |   |             | 
|AIP/IS Holdings, LLC, Membership Units (3), (5)                               |  |        | 352        |  |      |   | -          |       |  |   | 68,922      | 
|                                                                              |  |        |            |  |      |   |            |       |  |   |             | 
|Support Activities for Mining (0.61%)                                         |  |        |            |  |      |   |            |       |  |   |             | 
|DeepOcean Group Holding AS, Common Stock - (Norway) (3), (5)                  |  |        | 145,824    |  |      |   | 3,477,627  |       |  |   | 3,255,535   | 



61







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statement of Investments (Continued)



December 31, 2012



Showing Percentage of Total Cash and Investments
of the Partnership



|                                                                       |  |        |           |  |      |   |             |       |  |   | Percent of  | 
|---------------------------------------------------------------------- |  | ------ | --------- |  | ---- | - | ----------- | ----- |  | - | ----------- | 
|                                                                       |  |        |           |  |      |   |             | Fair  |  |   | Cash and    | 
|Investment                                                             |  | Shares |           |  | Cost |   |             | Value |  |   | Investments | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Equity Securities (continued)                                          |  |        |           |  |      |   |             |       |  |   |             | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Wired Telecommunications Carriers (1.55%)                              |  |        |           |  |      |   |             |       |  |   |             | 
|Integra Telecom, Inc., Common Stock (3), (5)                           |  |        | 1,274,522 |  |      | $ | 8,433,884   |       |  | $ | 5,038,718   | 
|Integra Telecom, Inc., Warrants (3), (5)                               |  |        | 346,939   |  |      |   | 19,920      |       |  |   | -           | 
|V Telecom Investment S.C.A, Common Shares - (Luxembourg) (3), (4), (5) |  |        | 1,393     |  |      |   | 3,236,256   |       |  |   | 3,273,095   | 
|Total Wired Telecommunications Carriers                                |  |        |           |  |      |   | 11,690,060  |       |  |   | 8,311,813   | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Total Equity Securities                                                |  |        |           |  |      |   | 122,062,033 |       |  |   | 34,880,565  | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Total Investments (7)                                                  |  |        |           |  |      |   | 609,070,368 |       |  |   | 517,683,087 | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Cash and Cash Equivalents                                              |  |        |           |  |      |   |             |       |  |   | 18,035,189  | 
|                                                                       |  |        |           |  |      |   |             |       |  |   |             | 
|Total Cash and Investments                                             |  |        |           |  |      |   |             |       |  | $ | 535,718,276 | 










Notes to Statement of Investments:



| | (1) | Investments in bank debt generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                   
| | (2) | Non-controlled affiliate – as defined under the Investment Company Act of 1940 (ownership of between 5% and 25% of the outstanding voting securities of this issuer).                                                                                                             
| |     |                                                                                                                                                                                                                                                                                   
| | (3) | Non-income producing security.                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                   
| | (4) | Principal amount denominated in foreign currency. Amortized cost and fair value converted from foreign currency to US dollars. (See Note 2)                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                   
| | (5) | Restricted security. (See Note 2)                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                   
| | (6) | Controlled issuer – as defined under the Investment Company Act of 1940 (ownership of 25% or more of the outstanding voting securities of this issuer).                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                   
| | (7) | Includes investments with an aggregate market value of $1,382,875 that have been segregated to collateralize certain unfunded commitments.                                                                                                                                        



Aggregate acquisitions and aggregate dispositions of investments,
other than government securities, totaled $359,020,926 and $211,216,033, respectively for the year ended December 31, 2012. Aggregate
acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and
maturities of debt investments. The total value of restricted securities and bank debt as of December 31, 2012 was $507,680,996,
or 94.8% of total cash and investments of the Partnership.



Swaps at December 31, 2012 were as follows:



|Investment                                                                       |  | Notional Amount |           |  | Fair Value |  
|-------------------------------------------------------------------------------- |  | --------------- | --------- |  | ---------- | -
|                                                                                 |  |                 |           |  |            |  
|Euro/US Dollar Cross-Currency Basis Swap, Pay Euros/Receive USD, Expires 5/16/14 |  | $               | 6,040,944 |  |            | $



See accompanying notes.



62







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statements of Operations



|                                                                                                           |  | Year Ended December 31, |            
|---------------------------------------------------------------------------------------------------------- |  | ----------------------- | -----------
|                                                                                                           |  | 2013                    |            
|                                                                                                           |  |                         |            
|Investment income                                                                                          |  |                         |            
|Interest income:                                                                                           |  |                         |            
|Companies less than 5% owned                                                                               |  | $                       | 60,323,117 
|Companies 5% to 25% owned                                                                                  |  |                         | 5,445,021  
|Companies more than 25% owned                                                                              |  |                         | 1,210,926  
|Dividend income:                                                                                           |  |                         |            
|Companies 5% to 25% owned                                                                                  |  |                         | -          
|Other income:                                                                                              |  |                         |            
|Companies less than 5% owned                                                                               |  |                         | 1,470,116  
|Companies 5% to 25% owned                                                                                  |  |                         | 458,627    
|Companies more than 25% owned                                                                              |  |                         | 701,239    
|Total investment income                                                                                    |  |                         | 69,609,046 
|                                                                                                           |  |                         |            
|Operating expenses                                                                                         |  |                         |            
|Management and advisory fees                                                                               |  |                         | 8,820,229  
|Interest expense                                                                                           |  |                         | 1,194,158  
|Amortization of deferred debt issuance costs                                                               |  |                         | 852,618    
|Administrative expenses                                                                                    |  |                         | 849,228    
|Legal fees, professional fees and due diligence expenses                                                   |  |                         | 400,039    
|Commitment fees                                                                                            |  |                         | 292,671    
|Director fees                                                                                              |  |                         | 192,410    
|Custody fees                                                                                               |  |                         | 146,360    
|Insurance expense                                                                                          |  |                         | 126,237    
|Professional fees relating to the Conversion                                                               |  |                         | -          
|Other operating expenses                                                                                   |  |                         | 394,873    
|Total operating expenses                                                                                   |  |                         | 13,268,823 
|                                                                                                           |  |                         |            
|Net investment income                                                                                      |  |                         | 56,340,223 
|                                                                                                           |  |                         |            
|Net realized and unrealized gain (loss) on investments and foreign currency                                |  |                         |            
|Net realized gain (loss):                                                                                  |  |                         |            
|Investments in companies less than 5% owned                                                                |  |                         | (40,379,889
|Investments in companies 5% to 25% owned                                                                   |  |                         | (7,004,857 
|Net realized gain (loss)                                                                                   |  |                         | (47,384,746
|                                                                                                           |  |                         |            
|Net change in net unrealized appreciation/depreciation                                                     |  |                         | 56,456,107 
|Net realized and unrealized gain (loss)                                                                    |  |                         | 9,071,361  
|                                                                                                           |  |                         |            
|Dividends paid on Series A preferred equity facility                                                       |  |                         | (1,516,585 
|Net change in accumulated dividends on Series A preferred equity facility                                  |  |                         | 22,033     
|Net increase in net assets
    applicable to common limited and general partners resulting from operations |  | $                       | 63,917,032 



See accompanying notes.



(1) Prior to the Conversion on April 2, 2012, the
Company's portfolio had different objectives.



63







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statements of Changes in Net
Assets



|                                                                                                                                                                                 |  | Year Ended December 31, 2013 |            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -----------
|                                                                                                                                                                                 |  |                              |            
|                                                                                                                                                                                 |  |                              |            
|                                                                                                                                                                                 |  | Total                        |            
|Net assets applicable to common limited and general partners, beginning of year                                                                                                  |  | $                            | 317,209,574
|                                                                                                                                                                                 |  |                              |            
|Contributions from common limited partner                                                                                                                                        |  |                              | 225,201,350
|                                                                                                                                                                                 |  |                              |            
|Net investment income                                                                                                                                                            |  |                              | 56,340,223 
|Net realized loss                                                                                                                                                                |  |                              | (47,384,746
|Net change in unrealized appreciation/depreciation                                                                                                                               |  |                              | 56,456,107 
|Dividends paid on preferred equity facility                                                                                                                                      |  |                              | (1,516,585 
|Net change in accumulated dividends on preferred equity facility                                                                                                                 |  |                              | 22,033     
|Net increase in net assets applicable to common limited and general partners resulting from operations                                                                           |  |                              | 63,917,032 
|                                                                                                                                                                                 |  |                              |            
|Distributions to common limited and general partners from:                                                                                                                       |  |                              |            
|Net investment income                                                                                                                                                            |  |                              | (53,418,640
|Realized gains                                                                                                                                                                   |  |                              | (645,691   
|                                                                                                                                                                                 |  |                              |            
|Net assets applicable to common limited and general partners, end of period (including accumulated net investment income of $26,850,149, $26,499,634 and $350,515, respectively) |  | $                            | 552,263,625







|                                                                                                                                                                               |  | Year Ended December 31, 2012 |            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | -----------
|                                                                                                                                                                               |  |                              |            
|                                                                                                                                                                               |  |                              |            
|                                                                                                                                                                               |  | Total                        |            
|Net assets applicable to common limited and general partners, beginning of year                                                                                                |  | $                            | 237,606,302
|                                                                                                                                                                               |  |                              |            
|Contributions from common limited partner                                                                                                                                      |  |                              | 82,692,187 
|                                                                                                                                                                               |  |                              |            
|Net investment income                                                                                                                                                          |  |                              | 42,473,133 
|Net realized loss                                                                                                                                                              |  |                              | (15,990,188
|Net change in unrealized appreciation/depreciation                                                                                                                             |  |                              | 3,205,937  
|Dividends paid on preferred equity facility                                                                                                                                    |  |                              | (1,542,932 
|Net change in accumulated dividends on preferred equity facility                                                                                                               |  |                              | (59,867    
|Net increase in net assets applicable to common limited and general partners resulting from operations                                                                         |  |                              | 28,086,083 
|                                                                                                                                                                               |  |                              |            
|Distributions to common limited and general partners from:                                                                                                                     |  |                              |            
|Net investment income                                                                                                                                                          |  |                              | (31,174,998
|                                                                                                                                                                               |  |                              |            
|Net assets applicable to common limited and general partners, end of year (including accumulated net investment income of $26,677,138, $26,326,623 and $350,515, respectively) |  | $                            | 317,209,574



See accompanying notes.



64







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statements of Changes in Net
Assets





|                                                                                                                                                                               |  | Year Ended December 31, 2011 |            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | -----------
|                                                                                                                                                                               |  |                              |            
|                                                                                                                                                                               |  |                              |            
|                                                                                                                                                                               |  | Total                        |            
|Net assets applicable to common limited and general partners,  beginning of year                                                                                               |  | $                            | 264,336,825
|                                                                                                                                                                               |  |                              |            
|Net investment income                                                                                                                                                          |  |                              | 45,835,335 
|Net realized gain                                                                                                                                                              |  |                              | 18,079,789 
|Net change in unrealized appreciation/depreciation                                                                                                                             |  |                              | (56,958,670
|Dividends paid on preferred equity facility                                                                                                                                    |  |                              | (1,456,281 
|Net change in accumulated dividends on preferred equity facility                                                                                                               |  |                              | (88,549    
|Net increase in net assets applicable to common limited and  general partners resulting from operations                                                                        |  |                              | 5,411,624  
|                                                                                                                                                                               |  |                              |            
|Distributions to common limited partner from:                                                                                                                                  |  |                              |            
|Net investment income                                                                                                                                                          |  |                              | (32,142,147
|                                                                                                                                                                               |  |                              |            
|Net assets applicable to common limited and general partners, end of year (including accumulated net investment income of $22,653,795, $22,303,280 and $350,515, respectively) |  | $                            | 237,606,302



See accompanying notes.



65







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Statements of Cash Flows



|                                                                                                                                                                                                 |  | Year Ended December 31, |             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | ------------
|                                                                                                                                                                                                 |  | 2013                    |             
|                                                                                                                                                                                                 |  |                         |             
|Operating activities                                                                                                                                                                             |  |                         |             
|Net increase in net assets applicable to common limited and general partners resulting  from operations                                                                                          |  | $                       | 63,917,032  
|Adjustments to reconcile net increase in net assets
    applicable to common  limited and general partners resulting from operations to net cash provided by (used in) operating
    activities: |  |                         |             
|Net realized loss (gain)                                                                                                                                                                         |  |                         | 47,384,746  
|Net change in unrealized appreciation/depreciation of investments                                                                                                                                |  |                         | (55,997,304 
|Dividends paid on Series A preferred equity facility                                                                                                                                             |  |                         | 1,516,585   
|Net change in accumulated dividends on Series A preferred equity facility                                                                                                                        |  |                         | (22,033     
|Accretion of original issue discount                                                                                                                                                             |  |                         | (2,017,458  
|Net accretion of market discount/premium                                                                                                                                                         |  |                         | (2,007,794  
|Interest and dividend income paid in kind                                                                                                                                                        |  |                         | (2,620,046  
|Amortization of deferred debt issuance costs                                                                                                                                                     |  |                         | 852,618     
|Changes in assets and liabilities:                                                                                                                                                               |  |                         |             
|Purchases of investment securities                                                                                                                                                               |  |                         | (468,467,273
|Proceeds from sales, maturities and paydowns of investments                                                                                                                                      |  |                         | 235,641,665 
|Decrease (increase) in accrued interest income - companies less than 5% owned                                                                                                                    |  |                         | (2,243,204  
|Decrease (increase) in accrued interest income - companies 5% to 25%
    owned                                                                                                                   |  |                         | 67,573      
|Decrease (increase) in accrued interest income - companies more than 25% owned                                                                                                                   |  |                         | 11,833      
|Decrease in receivable from parent                                                                                                                                                               |  |                         | -           
|Decrease (increase) in receivable for investments sold                                                                                                                                           |  |                         | 4,121,451   
|Decrease (increase) in prepaid expenses and other assets                                                                                                                                         |  |                         | (398,159    
|Increase (decrease) in payable for investments purchased                                                                                                                                         |  |                         | (7,107,877  
|Increase (decrease) in payable to the Investment Manager                                                                                                                                         |  |                         | 239,222     
|Decrease in management and advisory fees payable                                                                                                                                                 |  |                         | -           
|Increase in payable to parent                                                                                                                                                                    |  |                         | 531,717     
|Increase (decrease) in interest payable                                                                                                                                                          |  |                         | 311,736     
|Increase in accrued expenses and other liabilities                                                                                                                                               |  |                         | 420,314     
|Net cash provided by (used in) operating activities                                                                                                                                              |  |                         | (185,864,656
|                                                                                                                                                                                                 |  |                         |             
|Financing activities                                                                                                                                                                             |  |                         |             
|Proceeds from draws on credit facilities                                                                                                                                                         |  |                         | 283,000,000 
|Principal repayments on credit facilities                                                                                                                                                        |  |                         | (262,000,000
|Payments of debt issuance costs                                                                                                                                                                  |  |                         | (3,125,685  
|Dividends paid on the preferred equity facility                                                                                                                                                  |  |                         | (1,516,585  
|Dividends paid to common limited partner                                                                                                                                                         |  |                         | (42,851,498 
|Distributions of incentive allocation to the General Partner                                                                                                                                     |  |                         | (7,893,933  
|Contributions from common limited partner                                                                                                                                                        |  |                         | 225,201,350 
|Net cash provided by (used in) financing activities                                                                                                                                              |  |                         | 190,813,649 
|                                                                                                                                                                                                 |  |                         |             
|Net increase in cash and cash equivalents                                                                                                                                                        |  |                         | 4,948,993   
|Cash and cash equivalents at beginning of period                                                                                                                                                 |  |                         | 18,035,189  
|Cash and cash equivalents at end of period                                                                                                                                                       |  | $                       | 22,984,182  
|                                                                                                                                                                                                 |  |                         |             
|Supplemental cash flow information                                                                                                                                                               |  |                         |             
|Interest payments                                                                                                                                                                                |  | $                       | 352,084     



See accompanying notes.



66







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



1. Organization and Nature of Operations



Special Value Continuation Partners, LP
(the “Partnership”) a Delaware limited partnership, commenced operations on July 31, 2006 as an externally managed,
closed-end, non-diversified management investment company registered under the Investment Company Act of 1940, as amended (the
“1940 Act”). On April 2, 2012, the Partnership elected to be treated as a business development company (“BDC”)
under the 1940 Act (the “Conversion”). The Partnership’s investment objective is to achieve high total returns
through current income and capital appreciation, with an emphasis on principal protection. Investment operations are conducted
either directly in the Partnership or in TCPC Funding I, LLC, a Delaware limited liability company and a wholly owned subsidiary
of the Partnership (“TCPC Funding”). The Partnership and TCPC Funding invest primarily in the debt of middle-market
companies, including senior secured loans, junior loans, mezzanine debt and bonds. Such investments may include an equity component,
and, to a lesser extent, the Partnership and TCPC Funding may make equity investments directly. The Partnership and TCPC Funding
have elected to be treated as partnerships for U.S. federal income tax purposes. TCP Capital Corp. (“TCPC”) owns the
entire common limited partner interest in the Partnership. TCPC was formed on April 2, 2012 through the conversion of its predecessor,
Special Value Continuation Fund, LLC (“SVCF”), from a limited liability company to a corporation, leaving TCPC as the
surviving entity (the “Conversion”). Prior to its conversion to TCPC, SVCF owned the entire common limited partner
interest in the Partnership. On April 3, 2012, TCPC completed an initial public offering of its new common stock. TCPC has also
elected to be treated as a business development company under the 1940 Act.



The general partner of the Partnership
is SVOF/MM, LLC, which also serves as the administrator of TCPC and the Partnership (the “Administrator” or the “General
Partner”). The managing member of the Administrator is Tennenbaum Capital Partners, LLC, which serves as the Investment Manager
to TCPC, the Partnership and TCPC Funding. Most of the equity interests in the General Partner are owned directly or indirectly
by the Investment Manager and its employees.



Partnership management consists of the
General Partner and the Board of Directors. The General Partner directs and executes the day-to-day operations of the Partnership
subject to oversight from the Board of Directors, which performs certain functions required by the 1940 Act. The Board of Directors
has delegated investment management of the Partnership’s assets to the Investment Manager. At June 30, 2013, the Board of
Directors consisted of five persons, three of whom are independent. If the Partnership has preferred limited partner interests
outstanding, as it currently does, the holders of the preferred limited partner interests voting separately as a class are entitled
to elect two of the Directors. The remaining directors will be subject to election by holders of the common limited partner interests
and preferred limited partner interests voting together as a single class.



67









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements



December 31, 2013





1. Organization and Nature of Operations (continued)



Preferred Equity



At December 31, 2013, the Partnership had
6,700 Series A preferred limited partner interests (the “Preferred Interests”) issued and outstanding with a liquidation
preference of $20,000 per preferred limited interest. The Preferred Interests are redeemable at the option of the Partnership,
subject to certain conditions. Additionally, under certain conditions, the Partnership may be required to either redeem certain
of the Preferred Interests or repay indebtedness, at the Partnership’s option. Such conditions would include a failure by
the Partnership to maintain adequate collateral as required by its credit facility agreement or by the Statement of Preferences
of the Preferred Interests or a failure by the Partnership to maintain sufficient asset coverage as required by the 1940 Act. As
of December 31, 2013, the Partnership was in full compliance with such requirements.



The Preferred Interests accrue dividends
at an annual rate equal to LIBOR plus 0.85% or, in the case of any holders of Preferred Interests that are CP Conduits (as defined
in the leveraging documents), the higher of (i) LIBOR plus 0.85% or (ii) the CP Conduit’s cost of funds rate plus 0.85%,
subject to certain limitations and adjustments.



2. Summary of Significant Accounting
Policies



Basis of Presentation



The consolidated financial statements
of the Partnership include the accounts of the Partnership and TCPC Funding and have been prepared in accordance with
accounting principles generally accepted in the United States (“GAAP”). The following is a summary of the
significant accounting policies of the Partnership and TCPC Funding.



Use of Estimates



The preparation of the financial statements
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses
during the reporting period. Although management believes these estimates and assumptions to be reasonable, actual results could
differ from those estimates and differences could be material.



Investment Valuation



Management values investments at fair value
based upon the principles and methods of valuation set forth in policies adopted by the Partnership’s Board of Directors
and in conformity with procedures set forth in the Senior Facilities, as defined in Note 4, below, and the Statement of Preferences
for the Preferred Interests. Fair value is generally defined as the amount for which an investment would be sold in an orderly
transaction between market participants at the measurement date.



68







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



All investments are valued at least quarterly
based on affirmative pricing or quotations from independent third-party sources, with the exception of investments priced directly
by the Investment Manager which together comprise, in total, less than 5% of the capitalization of the Partnership. Investments
listed on a recognized exchange or market quotation system, whether U.S. or foreign, are valued for financial reporting purposes
as of the last business day of the reporting period using the closing price on the date of valuation. Liquid investments not listed
on a recognized exchange or market quotation system are valued using prices provided by a nationally recognized pricing service
or by using quotations from broker-dealers. Investments not priced by a pricing service or for which market quotations are either
not readily available or are determined to be unreliable are valued using affirmative valuations performed by independent valuation
services or, for investments aggregating less than 5% of the total capitalization of the Partnership, directly by the Investment
Manager.



Fair valuations of investments are determined
under guidelines adopted by the Partnership’s Board of Directors, and are subject to their approval. Generally, to increase
objectivity in valuing investments, the Investment Manager will utilize external measures of value, such as public markets or third-party
transactions, whenever possible. The Investment Manager’s valuation is not based on long-term work-out value, immediate liquidation
value, nor incremental value for potential changes that may take place in the future. The values assigned to investments that are
valued by the Investment Manager are based on available information and do not necessarily represent amounts that might ultimately
be realized, as these amounts depend on future circumstances and cannot reasonably be determined until the individual investments
are actually liquidated. The foregoing policies apply to all investments, including those in companies and groups of affiliated
companies aggregating more than 5% of the Partnership’s assets.



Fair valuations of investments in each
asset class are determined using one or more methodologies including the market approach, income approach, or, in the case of recent
investments, the cost approach, as appropriate. The market approach uses prices and other relevant information generated by
market transactions involving identical or comparable assets. The income approach uses valuation techniques to convert future
amounts (for example, cash flows or earnings) to a single present value amount (discounted). The measurement is based on the
value indicated by current market expectations about those future amounts. In following these approaches, the types of factors
that may be taken into account include, as relevant:  available current market data, including relevant and applicable market
trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information
rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings
and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies
that are public, M&A comparables, our principal market and enterprise values, among other factors.



69







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



Unobservable inputs used in the fair value
measurement of Level 3 investments as of December 31, 2013 included the following:



|Asset Type           |  | Fair Value |             |  | Valuation Technique |                             | Unobservable Input |                           | Range (Weighted Avg.)
|-------------------- |  | ---------- | ----------- |  | ------------------- | --------------------------- | ------------------ | ------------------------- | ---------------------
|Bank Debt            |  | $          | 520,014,443 |  |                     | Market rate approach        |                    | Market yields             |                      
|                     |  |            |             |  |                     | Market quotations           |                    | Indicative bid/ask quotes |                      
|                     |  |            |             |  |                     | Market comparable companies |                    | Revenue multiples         |                      
|                     |  |            |             |  |                     | Market comparable companies |                    | EBITDA multiples          |                      
|Other Corporate Debt |  | $          | 60,965,969  |  |                     | Market rate approach        |                    | Market yields             |                      
|                     |  |            |             |  |                     | Market quotations           |                    | Indicative bid/ask quotes |                      
|                     |  |            |             |  |                     | Market comparable companies |                    | EBITDA multiples          |                      
|Equity               |  | $          | 38,904,453  |  |                     | Market rate approach        |                    | Market yields             |                      
|                     |  |            |             |  |                     | Market quotations           |                    | Indicative bid/ask quotes |                      
|                     |  |            |             |  |                     | Market comparable companies |                    | Revenue multiples         |                      
|                     |  |            |             |  |                     | Market comparable companies |                    | EBITDA multiples          |                      



Generally, a change in an unobservable
input may result in a change to the value of an investment as follows:



|Input             |  | Impact to Value ifInput Increases |  | Impact to Value if
        Input Decreases
|----------------- |  | --------------------------------- |  | ------------------------------------------
|Market yields     |  | Decrease                          |  | Increase                                  
|Revenue multiples |  | Increase                          |  | Decrease                                  
|EBITDA multiples  |  | Increase                          |  | Decrease                                  



Investments may be categorized based on
the types of inputs used in valuing such investments. The level in the GAAP valuation hierarchy in which an investment falls is
based on the lowest level input that is significant to the valuation of the investment in its entirety. Transfers between levels
are recognized as of the beginning of the reporting period.



At December 31, 2013, the Partnership’s
investments were categorized as follows:



|Level |  | Basis for Determining Fair Value                     |  | Bank Debt |             |  | OtherCorporate Debt |   |             | EquitySecurities | 
|----- |  | ---------------------------------------------------- |  | --------- | ----------- |  | ------------------- | - | ----------- | ---------------- | 
|1     |  | Quoted prices in active markets for identical assets |  | $         | -           |  |                     | $ | -           |                  | 
|2     |  | Other observable market inputs *                     |  |           | 68,221,814  |  |                     |   | 77,312,367  |                  | 
|3     |  | Independent third-party pricing sources that employ  |  |           |             |  |                     |   |             |                  | 
|      |  | significant unobservable inputs                      |  |           | 515,953,643 |  |                     |   | 53,334,634  |                  | 
|3     |  | Investment Manager valuations with significant       |  |           |             |  |                     |   |             |                  | 
|      |  | unobservable inputs                                  |  |           | 4,060,800   |  |                     |   | 7,631,335   |                  | 
|Total |  |                                                      |  | $         | 588,236,257 |  |                     | $ | 138,278,336 |                  | 



| | * | For example, quoted prices in inactive markets or quotes
for comparable investments.
| | - | ------------------------------------------------------------------------------------



70







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



Changes in investments categorized as Level
3 during the year ended December 31, 2013 were as follows:



|                                                                                                                                                                            |  | Independent Third-Party Valuation |             
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | ------------
|                                                                                                                                                                            |  | Bank Debt                         |             
|Beginning balance                                                                                                                                                           |  | $                                 | 359,343,326 
|Net realized and unrealized gains (losses)                                                                                                                                  |  |                                   | 1,250,413   
|Acquisitions                                                                                                                                                                |  |                                   | 303,602,832 
|Dispositions                                                                                                                                                                |  |                                   | (138,765,762
|Transfers out of Level 3 *                                                                                                                                                  |  |                                   | (58,651,283 
|Transfers into Level 3 †                                                                                                                                                    |  |                                   | 49,174,117  
|Reclassifications within Level 3 ‡                                                                                                                                          |  |                                   | -           
|Ending balance                                                                                                                                                              |  | $                                 | 515,953,643 
|                                                                                                                                                                            |  |                                   |             
|Net change in unrealized appreciation/ depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above) |  | $                                 | 3,649,723   



| | * | Comprised of nine investments that transferred to Level
2 due to increased observable market activity.
| | - | ------------------------------------------------------------------------------------------------------

| | † | Comprised of six investments that transferred from Level
2 due to reduced trading volumes.
| | - | ------------------------------------------------------------------------------------------

| | ‡ | Comprised of one investment that was reclassified to
Investment Manager Valuation.
| | - | ----------------------------------------------------------------------------------





|                                                                                                                                                                     |  | Investment Manager Valuation |          
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ---------
|                                                                                                                                                                     |  | Bank Debt                    |          
|Beginning balance                                                                                                                                                    |  | $                            | -        
|Net realized and unrealized gains                                                                                                                                    |  |                              | 520,800  
|Acquisitions                                                                                                                                                         |  |                              | 3,540,000
|Dispositions                                                                                                                                                         |  |                              | -        
|Reclassifications within Level 3 §                                                                                                                                   |  |                              | -        
|Ending balance                                                                                                                                                       |  | $                            | 4,060,800
|                                                                                                                                                                     |  |                              |          
|Net change in unrealized appreciation/ depreciation during the period on investments still held at period end (included in net realized and unrealized gains, above) |  | $                            | 520,800  



| | § | Comprised of one investment that was reclassified from
Independent Third-Party Valuation.
| | - | -----------------------------------------------------------------------------------------



There were no transfers between Level 1
and 2 during the year ended December 31, 2013.



71









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



At December 31, 2012, the Partnership’s
investments were categorized as follows:



|Level |  | Basis for Determining Fair Value                                                     |  | Bank Debt |             |  | OtherCorporate Debt |   |            | EquitySecurities | 
|----- |  | ------------------------------------------------------------------------------------ |  | --------- | ----------- |  | ------------------- | - | ---------- | ---------------- | 
|1     |  | Quoted prices in active markets for identical assets                                 |  | $         | -           |  |                     | $ | -          |                  | 
|2     |  | Other observable market inputs *                                                     |  |           | 45,667,016  |  |                     |   | 53,453,085 |                  | 
|3     |  | Independent third-party pricing sources that employ significant  unobservable inputs |  |           | 359,343,326 |  |                     |   | 17,171,637 |                  | 
|3     |  | Investment Manager valuations with significant unobservable inputs                   |  |           | -           |  |                     |   | 7,167,458  |                  | 
|Total |  |                                                                                      |  | $         | 405,010,342 |  |                     | $ | 77,792,180 |                  | 



| | * | For example, quoted prices in inactive markets or quotes
for comparable investments.
| | - | ------------------------------------------------------------------------------------



Changes in investments categorized as Level
3 during the year ended December 31, 2012 were as follows:



|                                                                                                                                                                      |  | Independent Third-Party Valuation |            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------- | -----------
|                                                                                                                                                                      |  | Bank Debt                         |            
|Beginning balance                                                                                                                                                     |  | $                                 | 159,949,811
|Net realized and unrealized losses                                                                                                                                    |  |                                   | (8,709,385 
|Acquisitions                                                                                                                                                          |  |                                   | 288,929,785
|Dispositions                                                                                                                                                          |  |                                   | (84,994,292
|Transfers out of Level 3 †                                                                                                                                            |  |                                   | -          
|Transfers into Level 3 ‡                                                                                                                                              |  |                                   | 4,167,407  
|Ending balance                                                                                                                                                        |  | $                                 | 359,343,326
|                                                                                                                                                                      |  |                                   |            
|Net change in unrealized appreciation/ depreciation during the period on investments still held at period end (included in net realized and unrealized losses, above) |  | $                                 | (5,856,277 



| | † | Comprised of one investment that transferred to Level
2 due to increased trading volumes.
| | - | -----------------------------------------------------------------------------------------

| | ‡ | Comprised of one investment that transferred from Level
2 due to reduced trading volumes.
| | - | -----------------------------------------------------------------------------------------



72









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



|                                                                                                                                                                    |  | Investment Manager Valuation |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------
|                                                                                                                                                                    |  | Bank Debt                    |        
|Beginning balance                                                                                                                                                   |  | $                            | 51,436 
|Net realized and unrealized gains                                                                                                                                   |  |                              | -      
|Acquisitions                                                                                                                                                        |  |                              | -      
|Dispositions                                                                                                                                                        |  |                              | -      
|Transfers out of Level 3 §                                                                                                                                          |  |                              | -      
|Reclassifications within Level 3 **                                                                                                                                 |  |                              | (51,436
|Ending balance                                                                                                                                                      |  | $                            | -      
|                                                                                                                                                                    |  |                              |        
|Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains, above) |  | $                            | -      





| | § | Comprised of one investment that transferred to Level
2 due to increased trading volumes.
| | - | -----------------------------------------------------------------------------------------

| | ** | Comprised of claims in the liquidation of a portfolio
company that were reclassified as equity.
| | -- | -----------------------------------------------------------------------------------------------



There were no transfers between Level 1
and 2 during the year ended December 31, 2012.



Investment Transactions



Investment transactions are recorded on
the trade date, except for private transactions that have conditions to closing, which are recorded on the closing date. The cost
of investments purchased is based upon the purchase price plus those professional fees which are specifically identifiable to the
investment transaction. Realized gains and losses on investments are recorded based on the identification method, which typically
allocates the highest cost inventory to the basis of investments sold.



Cash and Cash Equivalents



Cash consists of amounts held in accounts
with brokerage firms and the custodian bank. Cash equivalents consist of highly liquid investments with an original maturity of
three months or less.



Repurchase Agreements



In connection with transactions in repurchase
agreements, it is the Partnership’s policy that the custodian take possession of the underlying collateral, the fair value
of which is required to exceed the principal amount of the repurchase transaction, including accrued interest, at all times. If
the seller defaults, and the fair value of the collateral declines, realization of the collateral may be delayed or limited.



73







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



Restricted Investments



The Partnership and TCPC Funding may invest
without limitation in instruments that are subject to legal or contractual restrictions on resale. These instruments generally
may be resold to institutional investors in transactions exempt from registration or to the public if the securities are registered.
Disposal of these investments may involve time-consuming negotiations and additional expense, and prompt sale at an acceptable
price may be difficult. Information regarding restricted investments is included at the end of the Consolidated Statement of Investments.
Restricted investments, including any restricted investments in affiliates, are valued in accordance with the investment valuation
policies discussed above.



Foreign Investments



The Partnership and TCPC Funding may invest
in instruments traded in foreign countries and denominated in foreign currencies. Foreign currency denominated investments comprised
approximately 2.7% and 1.6% of total investments at December 31, 2013 and December 31, 2012, respectively. Such positions were
converted at the respective closing rate in effect at December 31, 2013 and December 31, 2012 and reported in U.S. dollars. Purchases
and sales of investments and income and expense items denominated in foreign currencies, when they occur, are translated into U.S.
dollars on the respective dates of such transactions. The portion of gains and losses on foreign investments resulting from
fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments.



Investments in foreign companies and securities
of foreign governments may involve special risks and considerations not typically associated with investing in U.S. companies and
securities of the U.S. government. These risks include, among other things, revaluation of currencies, less reliable information
about issuers, different transactions clearance and settlement practices, and potential future adverse political and economic developments.
Moreover, investments in foreign companies and securities of foreign governments and their markets may be less liquid and their
prices more volatile than those of comparable U.S. companies and the U.S. government.



Derivatives



In order to mitigate certain currency exchange
and interest rate risks, the Partnership has entered into certain swap and option transactions. All derivatives are recognized
as either assets or liabilities in the Consolidated Statement of Assets and Liabilities. The transactions entered into are accounted
for using the mark-to-market method with the resulting change in fair value recognized in earnings for the current period. Risks
may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts
and from unanticipated movements in interest rates and the value of foreign currency relative to the U.S. dollar.



74









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



During the year ended December 31, 2013,
TCPC Funding purchased an interest rate cap with a notional amount of $25,000,000. During the year ended December 31, 2013, the
Partnership exited a cross currency basis swap with a notional amount of $6,040,944, and entered into a new cross currency basis
swap with a notional amount of $4,289,019. Gains and losses from derivatives during the year ended December 31, 2013 were included
in net realized and unrealized loss on investments in the Statement of Operations as follows:



|Instrument                 |  | Realized Gains (Losses) |   |  | Unrealized Gains (Losses) |  
|-------------------------- |  | ----------------------- | - |  | ------------------------- | -
|Cross currency basis swaps |  | $                       | - |  |                           | $
|Interest rate cap          |  | $                       | - |  |                           | $



At December 31, 2012, the Partnership held
a cross currency basis swap with a notional amount of $6,040,944. Gains and losses from derivatives during the year ended December
31, 2012 were included in net realized and unrealized loss on investments in the Statement of Operations as follows:



|Instrument                 |  | Realized Gains
(Losses) |   |  | Unrealized Gains
 (Losses) |  
|-------------------------- |  | ----------------------- | - |  | -------------------------- | -
|Cross currency basis swaps |  | $                       | - |  |                            | $



Valuations of derivatives held at December
31, 2013 and December 31, 2012 were determined using observable market inputs other than quoted prices in active markets for identical
assets and, accordingly, are classified as Level 2 in the GAAP valuation hierarchy.



Debt Issuance Costs



Costs of approximately $3.5 million were
incurred during 2006 in connection with placing the Partnership’s revolving credit facility. Additional costs of approximately
$1.5 million were incurred during 2013 in connection with the extension of the facility (see Note 4). These costs were deferred
and are being amortized on a straight-line basis over the estimated remaining life of the facility. The impact of utilizing the
straight-line amortization method versus the effective-interest method is not material to the operations of the Partnership.



Costs of approximately $1.6 million were
incurred during 2013 in connection with placing TCPC Funding’s revolving credit facility (see Note 4). These costs were deferred
and are being amortized on a straight-line basis over three years, the estimated life of that facility. The impact of utilizing
the straight-line amortization method versus the effective-interest method is not material to the operations of the Partnership
or TCPC Funding.



75









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



2. Summary of Significant Accounting
Policies (continued)



Revenue Recognition



Interest and dividend income, including
income paid in kind, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees, including
original issue discounts, earned with respect to capital commitments are generally amortized or accreted into interest income over
the life of the respective debt investment. Other fees, including certain amendment fees, prepayment fees and commitment fees on
broken deals, are recognized as earned. Prepayment fees and similar income received upon the early repayment of a loan or debt
security are included in interest income.



Certain debt investments are purchased
at a considerable discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general
market factors that influence the financial markets as a whole. GAAP generally requires that discounts on the acquisition of corporate
bonds, municipal bonds and treasury bonds be amortized using the effective-interest or constant-yield method. GAAP also requires
the collectability of interest to be considered when making accruals. Accordingly, when accounting for purchase discounts, discount
accretion income is recognized when it is probable that such amounts will be collected, generally at disposition. When principal
payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded
as interest income.



Income Taxes



The income or loss of the Partnership and
TCPC Funding is reported in the respective partners’ income tax returns. Consequently, no income taxes are paid at the partnership
level or reflected in the Partnership’s financial statements. In accordance with ASC Topic 740 – Income Taxes
, the Partnership and TCPC Funding recognize in their respective financial statements the effect of a tax position when it is determined
that such position is more likely than not, based on the technical merits, to be sustained upon examination. As of December 31,
2013, all tax years of the Partnership and TCPC Funding since January 1, 2010 remain subject to examination by federal tax authorities.
No such examinations are currently pending.



Cost and unrealized appreciation and depreciation
of investments (including derivatives) for U.S. federal income tax purposes at December 31, 2013 were as follows:



|Unrealized appreciation     |  | $ | 31,095,792  |  
|--------------------------- |  | - | ----------- | -
|Unrealized depreciation     |  |   | (66,306,406 | )
|Net unrealized depreciation |  |   | (35,210,614 | )
|                            |  |   |             |  
|Cost                        |  | $ | 801,156,529 |  



76







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



3. Management Fees, Incentive Compensation
and Other Expenses



Following the Conversion, the Partnership’s
management fee is calculated at an annual rate of 1.5% of total assets (excluding cash and cash equivalents) of TCPC on a consolidated
basis as of the beginning of each quarter and is payable to the Investment Manager quarterly in arrears.



Incentive compensation is only paid to
the extent that TCPC’s total performance exceeds a cumulative 8% annual return since January 1, 2013 (the “Total Return
Hurdle”). No incentive compensation was incurred prior to January 1, 2013. Beginning January 1, 2013, the incentive compensation
equals 20% of net investment income (reduced by preferred dividends) and 20% of net realized gains (reduced by any net unrealized
losses), subject to the Total Return Hurdle. The incentive compensation is payable quarterly in arrears as an allocation and distribution
to the General Partner and is calculated as the difference between cumulative incentive compensation earned since January 1, 2013
and cumulative incentive compensation paid since January 1, 2013. A reserve for incentive compensation is allocated to the account
of the General Partner based on the amount of additional incentive compensation that would have been distributable to the General
Partner assuming a hypothetical liquidation of TCPC and the Partnership at net asset value on the balance sheet date. At December
31, 2013, the General Partner’s equity interest in the Partnership was comprised entirely of a reserve amount of $1,168,583
as reflected in the Consolidated Statement of Changes in Net Assets.



Prior to the Conversion, the Investment
Manager received an annual management and advisory fee, payable monthly in arrears, equal to 1.0% of committed capital, defined
as the sum of the maximum amount of the Preferred Interests, the maximum amount available under the Partnership’s revolving
credit facility, the initial value of the contributed general partnership equity and the initial value of the contributed common
equity, subject to reduction by the amount of the Partnership’s revolving credit facility commitment when the facility is
no longer outstanding, and by the amount of the Preferred Interests when less than $1 million in liquidation preference of preferred
securities remains outstanding. In addition to the management fee, the General Partner was entitled to a performance allocation
equal to 20% of all cumulative income and gain distributions, subject to an 8% hurdle on undistributed contributed equity with
a catch up for the General Partner.



The Partnership bears all expenses incurred
in connection with its business, including fees and expenses of outside contracted services, such as custodian, administrative,
legal, audit and tax preparation fees, costs of valuing investments, insurance costs, brokers’ and finders’ fees relating
to investments, and any other transaction costs associated with the purchase and sale of investments.



4. Debt



At December 31, 2013 and December 31, 2012,
debt was comprised of amounts outstanding under senior secured revolving credit facilities issued by the Partnership (the “Partnership
Facility”) and TCPC Funding (the “TCPC Funding Facility,” and, together with the Partnership Facility, the “Revolving
Facilities”) as follows:



77









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



4. Debt (continued)



|                      |  | December 31, 2013 |            |  | December 31, 2012 |  
|--------------------- |  | ----------------- | ---------- |  | ----------------- | -
|Partnership Facility  |  | $                 | 45,000,000 |  |                   | $
|TCPC Funding Facility |  |                   | 50,000,000 |  |                   |  
|Total Debt            |  | $                 | 95,000,000 |  |                   | $



Partnership Facility



The Partnership Facility provides for amounts
to be drawn up to $116 million, subject to certain collateral and other restrictions. On September 19, 2013, the Partnership Facility
was amended to extend the maturity date from July 31, 2014 to July 31, 2016. Most of the cash and investments held directly by
the Partnership, as well as the net assets of TCPC Funding, are included in the collateral for the facility.



Advances under the Partnership Facility
through July 31, 2014 bear interest at LIBOR plus 0.44% per annum, except in the case of loans from CP Conduits, which bear interest
at the higher of LIBOR plus 0.44% or the CP Conduit’s cost of funds plus 0.44%, subject to certain limitations. Advances
under the Partnership Facility for periods from July 31, 2014 through the maturity date of the facility will bear interest at LIBOR
plus 2.50% per annum, except in the case of loans from CP Conduits, which bear interest at the higher of LIBOR plus 2.50% or the
CP Conduit’s cost of funds plus 2.50%, subject to certain limitations on the CP Conduit interest rate. In addition to amounts
due on outstanding debt, the facility accrues commitment fees of 0.20% per annum on the unused portion of the facility, or 0.25%
per annum when less than $46.4 million in borrowings are outstanding. The facility may be terminated, and any outstanding amounts
thereunder may become due and payable, should the Partnership fail to satisfy certain financial or other covenants. As of
December 31, 2013, the Partnership was in full compliance with such covenants.



TCPC Funding Facility



The TCPC Funding Facility, issued on May
15, 2013, provides for amounts to be drawn up to $100 million, subject to certain collateral and other restrictions. As of December
31, 2013, the facility was to mature on May 15, 2016, subject to extension by the lender at the request of TCPC Funding. On February
21, 2014, the maturity date of the facility was extended to May 15, 2017 and the facility was increased to $150 million in available
debt (see Note 9, Subsequent Events). The facility contains an accordion feature which allows for expansion of the facility
up to $200 million subject to consent from the lender and other customary conditions. The cash and investments of TCPC Funding
are included in the collateral for the facility.



As of December 31, 2013, borrowings under
the TCPC Funding Facility bore interest at a rate of LIBOR plus 2.75% per annum. In connection to the extension and expansion of
the facility on February 21, 2014, the interest rate was reduced to a rate of LIBOR plus 2.50% effective March 15, 2014. 
In addition to amounts due on outstanding debt, the facility accrues commitment fees of 0.75% per annum on the unused portion of
the facility, or 1.00% per annum when the unused portion is greater than 33% of the total facility. The facility may be terminated,
and any outstanding amounts thereunder may become due and payable, should TCPC Funding fail to satisfy certain financial or other
covenants. As of December 31, 2013, TCPC Funding was in full compliance with such covenants.



78









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



4. Debt (continued)



The weighted-average interest rates on
total outstanding borrowings at December 31, 2013 and December 31, 2012 were 1.35% and 0.65%, respectively.





As of December 31, 2013, the fair value of the TCPC Funding
Facility approximated its carrying value, and the Partnership Facility had a carrying value and a fair value of $45,000,000 and
$43,705,381, respectively. The fair values of the Revolving Facilities are estimated by discounting projected remaining payments
using market interest rates for our borrowings and entities with similar credit risks at the measurement date. At December 31,
2013, the Revolving Facilities would be deemed to be Level 3.





5. Commitments, Concentration of Credit
Risk and Off-Balance Sheet Risk



The Partnership and TCPC Funding conduct
business with brokers and dealers that are primarily headquartered in New York and Los Angeles and are members of the major securities
exchanges. Banking activities are conducted with a firm headquartered in the San Francisco area.



In the normal course of business, investment
activities involve executions, settlement and financing of various transactions resulting in receivables from, and payables to,
brokers, dealers and the custodian. These activities may expose the Partnership and TCPC Funding to risk in the event that such
parties are unable to fulfill contractual obligations. Management does not anticipate any material losses from counterparties with
whom it conducts business. Consistent with standard business practice, the Partnership and TCPC Funding enter into contracts that
contain a variety of indemnifications, and are engaged from time to time in various legal actions. The maximum exposure under these
arrangements and activities is unknown. However, management expects the risk of material loss to be remote.



The Consolidated Statement of Investments
includes certain revolving loan facilities held by the Partnership with aggregate unfunded balances of $11,414,879 at December
31, 2013.



6. Related Parties



TCPC, the Partnership, TCPC Funding, the
Investment Manager, the General Partner and their members and affiliates may be considered related parties. From time to time,
the Partnership advances payments to third parties on behalf of TCPC which are reimbursable through deductions from distributions
to TCPC. At December 31, 2013, no such amounts were outstanding. From time to time, the Investment Manager advances payments
to third parties on behalf of the Partnership and receives reimbursement from the Partnership. At December 31, 2013, amounts
reimbursable to the Investment Manager totaled $287,371, as reflected in the Consolidated Statement of Assets and Liabilities.



Pursuant to an administration agreement
between the Administrator and the Partnership (the “Administration Agreement”), the Administrator may be reimbursed
for costs and expenses incurred by the Administrator for office space rental, office equipment and utilities allocable to the Partnership,
as well as costs and expenses incurred by the Administrator or its affiliates relating to any administrative, operating, or other
non-investment advisory services provided by the Administrator
or its affiliates to the Partnership. For the year ended December 31, 2013, expenses allocated pursuant to the Administration
Agreements totaled $849,228. The Administrator waived reimbursement of all administrative expenses prior to January 1, 2013.



79









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



7. Common Limited Partner Equity



For the year ended December 31, 2013, in
connection with the follow-on public offerings of its common equity, TCPC contributed $225,201,350 in net receipts from the offering
to the Partnership, as reflected in the Consolidated Statement of Changes in Net Assets.



8.  Distributions



The Partnership’s distributions are
recorded on the record date. The timing of distributions is determined by the General Partner, which has provided the Investment
Manager with certain criteria for such distributions.



9. Subsequent Events



On February 21, 2014, TCPC announced the
expansion of the TCPC Funding Facility from $100 million in available debt to $150 million in available debt. The facility’s
maturity date was also extended from May 15, 2016 to May 15, 2017 and its interest rate was reduced from LIBOR plus 2.75% per annum
to LIBOR plus 2.50% per annum, subject to certain minimum borrowing requirements. The amendment is effective March 15, 2014.



80









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



10. Financial Highlights



The financial highlights with respect to the common limited
partner are as follows:





|                                                         |  | Year Ended December 31, |            
|-------------------------------------------------------- |  | ----------------------- | -----------
|                                                         |  | 2013                    |            
|                                                         |  |                         |            
|Return on invested assets (1)                            |  |                         | 13.6       
|                                                         |  |                         |            
|Gross return to common limited partner                   |  |                         | 17.8       
|Less: General Partner profit allocation                  |  |                         | (3.5       
|Return to common limited partner (2)                     |  |                         | 14.3       
|Ratios to average common equity: (3)                     |  |                         |            
|Net investment income(4)                                 |  |                         | 11.5       
|Expenses                                                 |  |                         | 3.4        
|Expenses and General Partner allocation                  |  |                         | 6.5        
|Ending net assets attributable to common limited partner |  | $                       | 552,263,625
|Portfolio turnover rate                                  |  |                         | 38.9       
|Weighted-average debt outstanding                        |  | $                       | 88,471,233 
|Weighted-average interest rate on debt                   |  |                         | 1.3        





|                                              |  | December 31, |           
|--------------------------------------------- |  | ------------ | ----------
|Asset Coverage:                               |  | 2013         |           
|                                              |  |              |           
|Series A Preferred Equity Facility:           |  |              |           
|Interests outstanding                         |  |              | 6,700     
|Involuntary liquidation value per interest    |  | $            | 20,075    
|Asset coverage per interest                   |  | $            | 68,255    
|Revolving Facilities                          |  |              |           
|Debt outstanding                              |  | $            | 95,000,000
|Asset coverage per $1,000 of debt outstanding |  | $            | 8,192     





| | (1) | Return on invested assets is a time-weighted, geometrically
linked rate of return and excludes cash and cash equivalents.
| | --- | -------------------------------------------------------------------------------------------------------------------------



| | (2) | Returns (net of dividends on the preferred equity facility,
allocations to the General Partner, and Partnership expenses, including financing costs and management fees) calculated on a monthly
geometrically linked, time-weighted basis.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | (3) | These ratios include interest expense but do not reflect
the effect of dividends on the preferred equity facility.
| | --- | ------------------------------------------------------------------------------------------------------------------



| | (4) | Net of allocation to the General Partner.
| | --- | -----------------------------------------



81







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Notes to Consolidated Financial Statements
(Continued)



December 31, 2013



11. Select Quarterly Data (Unaudited)





|                                                     |  | 2013 |           
|---------------------------------------------------- |  | ---- | ----------
|                                                     |  | Q4   |           
|                                                     |  |      |           
|Total investment income                              |  | $    | 20,985,737
|Net investment income                                |  |      | 16,501,761
|Net realized and unrealized gain                     |  |      | 3,120,563 
|Preferred dividends                                  |  |      | (355,610  
|Net increase in net assets resulting from operations |  | $    | 19,266,714



|                                                     |  | 2012 |           
|---------------------------------------------------- |  | ---- | ----------
|                                                     |  | Q4   |           
|                                                     |  |      |           
|Total investment income                              |  | $    | 17,181,003
|Net investment income                                |  |      | 14,222,900
|Net realized and unrealized gain (loss)              |  |      | (5,743,587
|Preferred dividends                                  |  |      | (391,402  
|Net increase in net assets resulting from operations |  | $    | 8,087,911 
|                                                     |  |      |           



|                                                     |  | 2011 (1) |           
|---------------------------------------------------- |  | -------- | ----------
|                                                     |  | Q4       |           
|                                                     |  |          |           
|Total investment income                              |  | $        | 9,103,299 
|Net investment income                                |  |          | 6,395,902 
|Net realized and unrealized loss                     |  |          | (2,980,033
|Preferred dividends                                  |  |          | (389,857  
|Net increase in net assets resulting from operations |  | $        | 3,026,012 



| | (1) | Periods prior to the Conversion reflect portfolios that
had different investment objectives.
| | --- | --------------------------------------------------------------------------------------------





82









Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Schedule of Changes in Investments
in Affiliates (1)



Year Ended December 31, 2013



|Security                                                                                                   |  | Value, Beginning of Period |            |  | Acquisitions |   |            | Dispositions (2) |  |   | Value, End of Period |  
|---------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- |  | ------------ | - | ---------- | ---------------- |  | - | -------------------- | -
|                                                                                                           |  |                            |            |  |              |   |            |                  |  |   |                      |  
|AGY Holding Corp., Senior Secured Term Loan, 12%, due 9/15/16                                              |  | $                          | -          |  |              | $ | 2,056,927  |                  |  | $ | -                    |  
|AGY Holding Corporation, Senior Secured 2nd Lien Notes, 11%, due 11/15/16                                  |  |                            | -          |  |              |   | 7,586,317  |                  |  |   | -                    |  
|Anacomp, Inc., Class A Common Stock                                                                        |  |                            | 1,255,527  |  |              |   | -          |                  |  |   | -                    |  
|EPMC HoldCo, LLC, Membership Units                                                                         |  |                            | 2,730,458  |  |              |   | -          |                  |  |   | (1,481,930           | )
|ESP Holdings, Inc., Cumulative Preferred 15%                                                               |  |                            | 3,643,088  |  |              |   | -          |                  |  |   | -                    |  
|ESP Holdings, Inc., Common Stock                                                                           |  |                            | 2,263,124  |  |              |   | -          |                  |  |   | -                    |  
|ESP Holdings, Inc., Junior Unsecured Subordinated Promissory Notes, 6% Cash + 10% PIK, due 12/31/19        |  |                            | 7,134,137  |  |              |   | 749,529    |                  |  |   | -                    |  
|Globecomm Systems Inc., Senior Secured 1st Lien Term Loan, LIBOR + 7.625%, 1.25% LIBOR Floor, due 12/11/18 |  |                            | -          |  |              |   | 14,850,000 |                  |  |   | -                    |  
|International Wire Group Holdings, Inc., Senior Secured Notes, 8.5%, due 10/15/17                          |  |                            | 15,450,000 |  |              |   | -          |                  |  |   | (15.759.750          | )
|KAGY Holding Company, Inc., Series A Preferred Stock                                                       |  |                            | -          |  |              |   | 8,096,057  |                  |  |   | -                    |  
|N510UA Aircraft Secured Mortgage, 20%, due 10/26/16                                                        |  |                            | 548,340    |  |              |   | -          |                  |  |   | (81,562              | )
|N512UA Aircraft Secured Mortgage, 20%, due 10/26/16                                                        |  |                            | 556,225    |  |              |   | -          |                  |  |   | (79,808              | )
|N536UA Aircraft Secured Mortgage, 16%, due 9/29/14                                                         |  |                            | 277,780    |  |              |   | -          |                  |  |   | (143,097             | )
|N545UA Aircraft Secured Mortgage, 16%, due 8/29/15                                                         |  |                            | 436,810    |  |              |   | -          |                  |  |   | (128,230             | )
|N585UA Aircraft Secured Mortgage, 20%, due 10/25/16                                                        |  |                            | 653,220    |  |              |   | -          |                  |  |   | (93,707              | )
|N659UA Aircraft Secured Mortgage, 12%, due 2/28/16                                                         |  |                            | 4,264,148  |  |              |   | -          |                  |  |   | (999,280             | )
|N661UA Aircraft Secured Mortgage, 12%, due 5/4/16                                                          |  |                            | 4,351,424  |  |              |   | -          |                  |  |   | (969,098             | )
|N510UA Equipment Trust Beneficial Interests                                                                |  |                            | 479,682    |  |              |   | 81,562     |                  |  |   | (35,912              | )
|N512UA Equipment Trust Beneficial Interests                                                                |  |                            | 473,761    |  |              |   | 79,808     |                  |  |   | (35,323              | )
|N536UA Equipment Trust Beneficial Interests                                                                |  |                            | 624,746    |  |              |   | 143,097    |                  |  |   | (45,201              | )
|N545UA Equipment Trust Beneficial Interests                                                                |  |                            | 616,897    |  |              |   | 128,359    |                  |  |   | (47,536              | )
|N585UA Equipment Trust Beneficial Interests                                                                |  |                            | 583,391    |  |              |   | 93,707     |                  |  |   | (46,776              | )
|N913DL Aircraft Secured Mortgage, 8%, due 3/15/17                                                          |  |                            | 367,370    |  |              |   | -          |                  |  |   | (77,509              | )
|N918DL Aircraft Secured Mortgage, 8%, due 8/15/18                                                          |  |                            | 454,580    |  |              |   | -          |                  |  |   | (68,612              | )
|N954DL Aircraft Secured Mortgage, 8%, due 3/20/19                                                          |  |                            | 597,720    |  |              |   | -          |                  |  |   | (78,825              | )
|N955DL Aircraft Secured Mortgage, 8%, due 6/20/19                                                          |  |                            | 612,000    |  |              |   | -          |                  |  |   | (75,824              | )
|N956DL Aircraft Secured Mortgage, 8%, due 5/20/19                                                          |  |                            | 612,850    |  |              |   | -          |                  |  |   | (77,085              | )
|N957DL Aircraft Secured Mortgage, 8%, due 6/20/19                                                          |  |                            | 617,440    |  |              |   | -          |                  |  |   | (76,487              | )
|N959DL Aircraft Secured Mortgage, 8%, due 7/20/19                                                          |  |                            | 622,030    |  |              |   | -          |                  |  |   | (75,896              | )
|N960DL Aircraft Secured Mortgage, 8%, due 10/20/19                                                         |  |                            | 640,730    |  |              |   | -          |                  |  |   | (74,776              | )
|N961DL Aircraft Secured Mortgage, 8%, due 8/20/19                                                          |  |                            | 636,990    |  |              |   | -          |                  |  |   | (76,582              | )
|N976DL Aircraft Secured Mortgage, 8%, due 2/15/18                                                          |  |                            | 473,280    |  |              |   | -          |                  |  |   | (79,647              | )
|N913DL Equipment Trust Beneficial Interests                                                                |  |                            | 111,520    |  |              |   | 77,509     |                  |  |   | (94,032              | )
|N918DL Equipment Trust Beneficial Interests                                                                |  |                            | 120,530    |  |              |   | 68,612     |                  |  |   | (89,338              | )
|N954DL Equipment Trust Beneficial Interests                                                                |  |                            | 113,390    |  |              |   | 78,825     |                  |  |   | (107,751             | )
|N955DL Equipment Trust Beneficial Interests                                                                |  |                            | 160,650    |  |              |   | 75,824     |                  |  |   | (106,437             | )
|N956DL Equipment Trust Beneficial Interests                                                                |  |                            | 163,200    |  |              |   | 77,085     |                  |  |   | (107,904             | )
|N957DL Equipment Trust Beneficial Interests                                                                |  |                            | 163,880    |  |              |   | 76,487     |                  |  |   | (107,457             | )
|N959DL Equipment Trust Beneficial Interests                                                                |  |                            | 164,390    |  |              |   | 75,896     |                  |  |   | (107,015             | )
|N960DL Equipment Trust Beneficial Interests                                                                |  |                            | 169,660    |  |              |   | 74,776     |                  |  |   | (106,678             | )
|N961DL Equipment Trust Beneficial Interests                                                                |  |                            | 171,360    |  |              |   | 76,582     |                  |  |   | (108,546             | )
|N967DL Equipment Trust Beneficial Interests                                                                |  |                            | 83,300     |  |              |   | 79,647     |                  |  |   | (102,560             | )
|RM Holdco, LLC, Membership Units                                                                           |  |                            | 849,478    |  |              |   | -          |                  |  |   | -                    |  
|RM Holdco, LLC, Subordinated Convertible Term Loan, 1.12% PIK, due 3/21/18                                 |  |                            | 5,106,805  |  |              |   | 57,991     |                  |  |   | -                    |  
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 11%, due 3/19/16                                |  |                            | 3,759,156  |  |              |   | 16,974     |                  |  |   | (149,183             | )
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B, 12% Cash + 7% PIK, due 3/19/16                  |  |                            | 6,258,122  |  |              |   | 567,205    |                  |  |   | -                    |  
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B-1, 12% Cash + 7% PIK, due 3/19/16                |  |                            | 1,976,470  |  |              |   | 186,901    |                  |  |   | -                    |  
|RM OpCo, LLC, Convertible 1st Lien Term Loan Tranche B-1, 12% Cash + 7% PIK, due 3/21/16                   |  |                            | -          |  |              |   | 1,339,883  |                  |  |   | -                    |  
|United N659UA-767, LLC (N659UA)                                                                            |  |                            | 2,771,428  |  |              |   | 999,280    |                  |  |   | (674,714             | )
|United N661UA-767, LLC (N661UA)                                                                            |  |                            | 2,789,809  |  |              |   | 969,098    |                  |  |   | (663,034             | )
|Wasserstein Cosmos Co-Invest, L.P., Limited Partnership Units                                              |  |                            | -          |  |              |   | 5,000,000  |                  |  |   | -                    |  

Notes to Schedule of Changes
in Investments in Affiliates:



| | (1) | The
issuers of the securities listed on this schedule are considered affiliates under the Investment Company Act of 1940 due to the
ownership by the Company of 5% or more of the issuers' voting securities.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Dispositions
include sales, paydowns, mortgage amortizations, and aircraft depreciation.
| | --- | ----------------------------------------------------------------------------------------





83







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Schedule of Changes in Investments
in Affiliates (1)



Year Ended December 31, 2012





|Security                                                                                            |  | Value, Beginning of Period |            |  | Acquisitions |   |            | Dispositions  (2) |  |   | Value, End of Period |  
|--------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- |  | ------------ | - | ---------- | ----------------- |  | - | -------------------- | -
|                                                                                                    |  |                            |            |  |              |   |            |                   |  |   |                      |  
|Anacomp, Inc., Class A Common Stock                                                                 |  | $                          | 740,761    |  |              | $ | -          |                   |  | $ | -                    |  
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N913DL), 8%, due 7/15/18                          |  |                            | -          |  |              |   | 403,947    |                   |  |   | (37,389              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N918DL), 8%, due 7/15/18                          |  |                            | -          |  |              |   | 490,003    |                   |  |   | (33,390              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N954DL), 8%, due 9/20/19                          |  |                            | -          |  |              |   | 631,014    |                   |  |   | (37,814              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N955DL), 8%, due 9/20/19                          |  |                            | -          |  |              |   | 645,523    |                   |  |   | (36,417              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N956DL), 8%, due 9/20/19                          |  |                            | -          |  |              |   | 646,372    |                   |  |   | (37,011              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N957DL), 8%, due 9/20/19                          |  |                            | -          |  |              |   | 651,170    |                   |  |   | (36,735              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N959DL), 8%, due 9/20/19                          |  |                            | -          |  |              |   | 655,930    |                   |  |   | (36,462              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N960DL), 8%, due 9/20/19                          |  |                            | -          |  |              |   | 675,587    |                   |  |   | (35,956              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N961DL), 8%, due 9/20/19                          |  |                            | -          |  |              |   | 671,812    |                   |  |   | (36,803              | )
|Delta Air Lines, Inc., Aircraft Secured Mortgage (N976DL), 8%, due 7/15/18                          |  |                            | -          |  |              |   | 512,643    |                   |  |   | (38,636              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N913DL)                                |  |                            | -          |  |              |   | 145,176    |                   |  |   | (31,277              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N918DL)                                |  |                            | -          |  |              |   | 162,691    |                   |  |   | (32,027              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N954DL)                                |  |                            | -          |  |              |   | 202,368    |                   |  |   | (40,415              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N955DL)                                |  |                            | -          |  |              |   | 204,598    |                   |  |   | (40,116              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N956DL)                                |  |                            | -          |  |              |   | 205,404    |                   |  |   | (40,679              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N957DL)                                |  |                            | -          |  |              |   | 206,328    |                   |  |   | (40,572              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N959DL)                                |  |                            | -          |  |              |   | 207,244    |                   |  |   | (40,467              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N960DL)                                |  |                            | -          |  |              |   | 211,653    |                   |  |   | (40,578              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N961DL)                                |  |                            | -          |  |              |   | 211,555    |                   |  |   | (41,241              | )
|Delta Air Lines, Inc., Equipment Trust Beneficial Interests (N976DL)                                |  |                            | -          |  |              |   | 173,597    |                   |  |   | (37,271              | )
|EPMC HoldCo, LLC, Membership Units                                                                  |  |                            | 5,264,007  |  |              |   | -          |                   |  |   | (1,276,226           | )
|ESP Holdings, Inc., Cumulative Preferred 15%                                                        |  |                            | 3,287,872  |  |              |   | -          |                   |  |   | -                    |  
|ESP Holdings, Inc., Common Stock                                                                    |  |                            | 7,473,887  |  |              |   | -          |                   |  |   | -                    |  
|ESP Holdings, Inc., Junior Unsecured Subordinated Promissory Notes, 6% Cash + 10% PIK, due 12/31/19 |  |                            | 6,240,393  |  |              |   | 1,000,494  |                   |  |   | -                    |  
|International Wire Group Holdings, Inc., Common Stock                                               |  |                            | 30,077,606 |  |              |   | -          |                   |  |   | (31,940,733          | )
|International Wire Group Holdings, Inc., Senior Notes, 11.5% Cash or 12.25% PIK, due 4/15/15        |  |                            | 18,180,000 |  |              |   | -          |                   |  |   | (18,000,000          | )
|International Wire Group Holdings, Inc., Senior Secured Notes, 8.5%, due 10/15/17                   |  |                            | -          |  |              |   | 15,000,000 |                   |  |   | -                    |  
|Real Mex Restaurants, Inc. Senior Secured Notes, 14%, due 1/1/13                                    |  |                            | 12,410,823 |  |              |   | -          |                   |  |   | (6,627,711           | )
|RM Holdco, LLC, Membership Units                                                                    |  |                            | -          |  |              |   | 2,010,777  |                   |  |   | -                    |  
|RM Holdco, LLC, Subordinated Convertible Term Loan, 1.12% PIK, due 3/21/18                          |  |                            | -          |  |              |   | 5,106,805  |                   |  |   | -                    |  
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 11%, due 3/19/16                         |  |                            | -          |  |              |   | 3,759,156  |                   |  |   | -                    |  
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B, 12% Cash + 7% PIK, due 3/19/16           |  |                            | -          |  |              |   | 6,258,122  |                   |  |   | -                    |  
|RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche B-1, 12% Cash + 7% PIK, due 3/19/16         |  |                            |            |  |              |   | 1,922,118  |                   |  |   | -                    |  
|United Airlines, Inc., Aircraft Secured Mortgage (N510UA), 20%, due 9/26/16                         |  |                            | 624,066    |  |              |   | -          |                   |  |   | (66,886              | )
|United Airlines, Inc., Aircraft Secured Mortgage (N512UA), 20%, due 10/26/16                        |  |                            | 630,208    |  |              |   | -          |                   |  |   | (65,449              | )
|United Airlines, Inc., Aircraft Secured Mortgage (N536UA), 16%, due 8/21/14                         |  |                            | 414,963    |  |              |   | -          |                   |  |   | (122,068             | )
|United Airlines, Inc., Aircraft Secured Mortgage (N545UA), 16%, due 7/17/15                         |  |                            | 563,575    |  |              |   | -          |                   |  |   | (109,385             | )
|United Airlines, Inc., Aircraft Secured Mortgage (N585UA), 20%, due 10/25/16                        |  |                            | 739,958    |  |              |   | -          |                   |  |   | (76,848              | )
|United Airlines, Inc., Aircraft Secured Mortgage (N659UA), 12%, due 3/28/16                         |  |                            | 5,014,613  |  |              |   | -          |                   |  |   | (886,810             | )
|United Airlines, Inc., Aircraft Secured Mortgage (N661UA), 12%, due 5/4/16                          |  |                            | 5,192,014  |  |              |   | -          |                   |  |   | (860,025             | )
|United Airlines, Inc., Equipment Trust Beneficial Interests (N510UA)                                |  |                            | 467,137    |  |              |   | 66,886     |                   |  |   | (35,913              | )
|United Airlines, Inc., Equipment Trust Beneficial Interests (N512UA)                                |  |                            | 458,665    |  |              |   | 65,449     |                   |  |   | (35,325              | )
|United Airlines, Inc., Equipment Trust Beneficial Interests (N536UA)                                |  |                            | 686,303    |  |              |   | 122,068    |                   |  |   | (45,201              | )
|United Airlines, Inc., Equipment Trust Beneficial Interests (N545UA)                                |  |                            | 612,589    |  |              |   | 109,256    |                   |  |   | (47,505              | )
|United Airlines, Inc., Equipment Trust Beneficial Interests (N585UA)                                |  |                            | 498,602    |  |              |   | 76,848     |                   |  |   | (46,776              | )
|United N659UA-767, LLC (N659UA)                                                                     |  |                            | 2,274,815  |  |              |   | 886,810    |                   |  |   | (674,712             | )
|United N661UA-767, LLC (N661UA)                                                                     |  |                            | 2,205,523  |  |              |   | 860,025    |                   |  |   | (663,033             | )



Notes to Consolidated Schedule of Changes
in Investments in Affiliates:



| | (1) | The issuers of the securities listed on this schedule are considered affiliates under the Investment Company Act of 1940 due to the ownership by the Partnership of 5% or more of the issuers' voting securities.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Dispositions include sales, paydowns, mortgage amortizations, and aircraft depreciation.
| | --- | ----------------------------------------------------------------------------------------



84







Special Value Continuation Partners, LP

(A Delaware Limited Partnership)



Consolidated Schedule of Restricted Securities
of Unaffiliated Issuers



December 31, 2013



|Investment                                                                         |  | Acquisition Date
|---------------------------------------------------------------------------------- |  | ----------------
|                                                                                   |  |                 
|AIP/IS Holdings, LLC, Membership Units                                             |  | Var. 2009 & 2010
|Avanti Communications Group, PLC, Senior Secured Notes, 10%, due 10/1/19           |  | 9/26/13         
|BPA Laboratories, Inc., Senior Secured Notes, 12.25%, due 4/1/17                   |  | 3/5/12          
|Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19               |  | 10/19/12        
|Carolina Beverage Group, LLC, Secured Notes, 10.625%, due 8/1/18                   |  | 7/26/13         
|Constellation Enterprises, LLC, Senior Secured 1st Lien Notes, 10.625%, due 2/1/16 |  | 1/20/11         
|Flight Options Holdings I, Inc., Warrants to Purchase Common Stock                 |  | 12/4/13         
|Integra Telecom, Inc., Common Stock                                                |  | 11/19/09        
|Integra Telecom, Inc., Warrants                                                    |  | 11/19/09        
|Iracore International, Inc., Senior Secured Notes, 9.5%, due 6/1/18                |  | 5/8/13          
|Magnolia Finance V plc, Asset-Backed Credit Linked Notes, 13.125%, due 8/2/21      |  | 8/1/13          
|Marsico Holdings, LLC Common Interest Units                                        |  | 9/10/12         
|Precision Holdings, LLC, Class C Membership Interests                              |  | Var. 2010 & 2011
|Shop Holding, LLC, Class A Units                                                   |  | 6/2/11          
|Shop Holding, LLC, Warrants to Purchase Class A Units                              |  | 6/2/11          
|SiTV, Inc., Warrants to Purchase Common Stock                                      |  | 8/3/12          
|SLS Breeze Intermediate Holdings, Inc., Warrants to Purchase Common Stock          |  | 9/25/13         
|St Barbara Ltd., 1st Priority Senior Secured Notes, 8.875%, due 4/15/18            |  | 3/22/13         
|STG-Fairway Holdings, LLC, Class A Units                                           |  | 12/30/10        
|The Telx Group, Inc., Senior Unsecured Notes, 10% Cash + 2% PIK, due 9/26/19       |  | 9/26/11         
|Trade Finance Funding I, Ltd., Secured Class B Notes, 10.75%, due 11/13/18         |  | 11/13/13        
|V Telecom Investment S.C.A, Common Shares                                          |  | 11/9/12         
|Vantage Oncology, LLC, Senior Secured Notes, 9.5%, due 6/15/17                     |  | 6/6/13          



December 31, 2012



|Investment                                                                         |  | Acquisition Date
|---------------------------------------------------------------------------------- |  | ----------------
|                                                                                   |  |                 
|AIP/IS Holdings, LLC, Membership Units                                             |  | Var. 2009 & 2010
|Bally Total Fitness Holding Corporation, Common Stock                              |  | 4/30/10         
|Bally Total Fitness Holding Corporation, Warrants                                  |  | 4/30/10         
|BPA Laboratories, Inc., Senior Secured Notes, 12.25%, due 4/1/17                   |  | 3/5/12          
|Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19               |  | 10/19/12        
|Constellation Enterprises, LLC, Senior Secured 1st Lien Notes, 10.625%, due 2/1/16 |  | 1/20/11         
|DeepOcean Group Holding BV, Common Stock                                           |  | 5/13/11         
|Integra Telecom, Inc., Common Stock                                                |  | 11/19/09        
|Integra Telecom, Inc., Warrants                                                    |  | 11/19/09        
|La Paloma Residual Bank Debt Claim                                                 |  | 2/2/05          
|Marsico Holdings, LLC Common Interest Units                                        |  | 9/10/12         
|Precision Holdings, LLC, Class C Membership Interests                              |  | Var. 2010 & 2011
|Shop Holding, LLC, Class A Units                                                   |  | 6/2/11          
|Shop Holding, LLC, Warrants to Purchase Class A Units                              |  | 6/2/11          
|SiTV, Inc., Warrants to Purchase Common Stock                                      |  | 8/3/12          
|STG-Fairway Holdings, LLC, Class A Units                                           |  | 12/30/10        
|The Telx Group, Inc., Senior Unsecured Notes, 10% Cash + 2% PIK, due 9/26/19       |  | 9/26/11         
|V Telecom Investment S.C.A, Common Shares                                          |  | 11/9/12         





85







| | Item 9. | Changes in Disagreements with Accountants on Accounting and Financial Disclosure
| | ------- | --------------------------------------------------------------------------------



None



| | Item 9A. | Controls and Procedures
| | -------- | -----------------------



| | (a) | Evaluation of Disclosure Controls and Procedures
| | --- | ------------------------------------------------



As of December 31, 2013 (the end of the period covered by this
report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the 1934 Act). Based on that evaluation, our management,
including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective
and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship
of such possible controls and procedures.



| | (b) | Management’s Report on Internal Control Over Financial Reporting
| | --- | ----------------------------------------------------------------



Management is responsible for establishing and maintaining adequate
internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial
reporting as of December 31, 2013. Internal control over financial reporting is a process designed by, or under the supervision
of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Partnership; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement preparation and presentation. Management performed an assessment
of the effectiveness of our internal control over financial reporting as of December 31, 2013 based upon the criteria set forth
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based on our assessment, management determined that our internal control over financial reporting was effective as of December
31, 2013.



| | (c) | Changes in Internal Control Over Financial Reporting
| | --- | ----------------------------------------------------



There have been no changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter,
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



| | Item 9B. | Other Information
| | -------- | -----------------



None



86







PART III



| | Item 10. | Directors, Executive Officers and Corporate Governance
| | -------- | ------------------------------------------------------



The information required by this item is contained in the Registrant’s
definitive Proxy Statement for its 2014 Annual Stockholders Meeting to be filed with the Securities and Exchange Commission within
120 days after December 31, 2013 and is incorporated herein by reference.



| | Item 11. | Executive Compensation
| | -------- | ----------------------



The information required by this item is
contained in the Registrant’s definitive Proxy Statement for its 2014 Annual Stockholders Meeting to be filed with the Securities
and Exchange Commission within 120 days after December 31, 2013 and is incorporated herein by reference.



| | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
| | -------- | ----------------------------------------------------------------------------------------------



The information required by this item is
contained in the Registrant’s definitive Proxy Statement for its 2014 Annual Stockholders Meeting to be filed with the Securities
and Exchange Commission within 120 days after December 31, 2013 and is incorporated herein by reference.



| | Item 13. | Certain Relationships and Related Transactions, and Director Independence
| | -------- | -------------------------------------------------------------------------



The information required by this item is
contained in the Registrant’s definitive Proxy Statement for its 2014 Annual Stockholders Meeting to be filed with the Securities
and Exchange Commission within 120 days after December 31, 2013 and is incorporated herein by reference.



| | Item 14. | Principal Accountant Fees and Services
| | -------- | --------------------------------------



The information required by this item is
contained in the Registrant’s definitive Proxy Statement for its 2014 Annual Stockholders Meeting to be filed with the Securities
and Exchange Commission within 120 days after December 31, 2013 and is incorporated herein by reference.



87







PART IV



| | Item 15. | Exhibits and Consolidated Financial Statement Schedules
| | -------- | -------------------------------------------------------



| | a. | Documents Filed as Part of this Report
| | -- | --------------------------------------



The following reports and consolidated financial statements
are set forth in Item 8:



|                                                                                                         | Page
|-------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Registered Public Accounting Firm                                                  | 49  
|Consolidated Statements of Assets and Liabilities as of December 31, 2013 and 2012                       | 50  
|Consolidated Statements of Investments as of December 31, 2013 and 2012                                  | 51  
|Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011               | 63  
|Consolidated Statements of Changes in Net Assets for the years ended December 31, 2013, 2012 and 2011    | 64  
|Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011               | 66  
|Notes to Consolidated Financial Statements                                                               | 67  
|Consolidated Schedules of Changes in Investments in Affiliates as of December 31, 2013 and 2012          | 83  
|Consolidated Schedules of Restricted Securities of Unaffiliated Issuers as of December 31, 2013 and 2012 | 85  



| | b. | Exhibits
| | -- | --------



The following exhibits are filed as part of this report or hereby
incorporated by reference to exhibits previously filed with the SEC:



|Number |  | Description                                                                                                              
|------ |  | -------------------------------------------------------------------------------------------------------------------------
|3.1    |  | Articles of Incorporation of the Registrant (1)                                                                          
|4.1    |  | Statement of Preferences of Preferred Interests (2)                                                                      
|10.1   |  | Form of Investment Management Agreement By and Between Registrant and Tennenbaum Capital Partners, LLC (3)               
|10.2   |  | Form of Administration
    Agreement of the Registrant (4)                                                               
|10.3   |  | Form of Co-Management
    Agreement of the Registrant (5)                                                                
|10.4   |  | Custodial Agreement
    dated July 31, 2006 (6)                                                                          
|10.5   |  | Credit Agreement
    dated July 31, 2006 (7)                                                                             
|10.6   |  | Form of First
    Amendment to Credit Agreement dated February 28, 2011 (8)                                              
|10.7   |  | Form of Second
    Amendment to Credit Agreement dated September 18, 2013 (9)                                            
|10.8   |  | Form of Loan
    Financing and Servicing Agreement dated May 15, 2013 (10)                                               
|10.9   |  | Form of Amendment
    No. 1 to Loan Financing and Servicing Agreement dated August 13, 2013 (11)                         
|10.10  |  | Form of Amendment
    No. 2 to Loan Financing and Servicing Agreement dated September 10, 2013 (12)                      
|10.11  |  | Form of Sale
    and Contribution Agreement dated May 15, 2013 (13)                                                      
|12     |  | Computation of Ratios (included in the notes to the financial statements contained in this report)                       
|14.1   |  | Consolidated
    Code of Ethics of the Registrant and the Adviser (14)                                                   
|21.1   |  | Subsidiaries of the Registrant*                                                                                          
|31.1   |  | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 *          
|31.2   |  | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 *          
|32.1   |  | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *










| | *   | Filed herewith.                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to Exhibit (k)(6) to TCP Capital Corp.’s (formerly Special Value Continuation Fund, LLC) Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-172669), filed on May 13, 2011.
| | (2) | Incorporated by reference to Exhibit (k)(7) to TCP Capital Corp.’s Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-172669), filed on May 13, 2011.                                                
| | (3) | Incorporated by reference to Exhibit (k)(8) to TCP Capital Corp.’s Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-172669), filed on May 13, 2011.                                                
| | (4) | Incorporated by reference to Exhibit (k)(9) to TCP Capital Corp.’s Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 333-172669), filed on May 13, 2011.                                                

| | (5) | Incorporated by reference to Exhibit (g)(2) to Registrant's Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 811-21935), filed on October 31, 2006.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



88







| | (6)  | Incorporated by reference to Exhibit 10.2 to Form 10-12G of Registrant (File No. 000-54393), filed May 6, 2011.                                                                           
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (7)  | Incorporated by reference to Exhibit 10.5 to Form 10-12G of Registrant (File No. 000-54393), filed May 6, 2011.                                                                           
| | (8)  | Incorporated by reference to Exhibit 10.6 to Form 10-12G of Registrant (File No. 000-54393), filed May 6, 2011.                                                                           
| | (9)  | Incorporated by reference to Exhibit 10.01 to TCP Capital Corp.'s Form 8-K, filed September 19, 2013.                                                                                     
| | (10) | Incorporated by reference to Exhibits 10.01 of TCP Capital Corp.'s Form 8-K filed on May 17, 2013.                                                                                        
| | (11) | Incorporated by reference to Exhibit 10.02 of TCP Capital Corp.'s Form 8-K filed on September 10, 2013.                                                                                   
| | (12) | Incorporated by reference to Exhibit 10.01 of TCP Capital Corp.'s Form 8-K filed on September 10, 2013.                                                                                   
| | (13) | Incorporated by reference to Exhibit 10.02 of TCP Capital Corp.'s Form 8-K filed on May 17, 2013.                                                                                         
| | (14) | Incorporated by reference to Exhibit (r) to Registrant's Registration Statement under the Securities Act of 1933, as amended, on Form N-2 (File No. 811-21935), filed on October 31, 2006.



89







SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.



Special Value Continuation Partners, LP



|By:                     | 
|----------------------- | 
|                        | 
|/s/ Howard M. Levkowitz | 
|Howard M. Levkowitz     | 
|Chief Executive Officer | 
|                        | 

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



|Date          |  | Signature               |  | Title                                               
|------------- |  | ----------------------- |  | ----------------------------------------------------
|              |  |                         |  |                                                     
|March 6, 2014 |  | /s/ Howard M. Levkowitz |  | Chief Executive Officer, Chairman of                
|              |  | Howard M. Levkowitz     |  | the Board and Director (Principal Executive Officer)
|              |  |                         |  |                                                     
|March 6, 2014 |  | /s/ Eric J. Draut       |  | Director                                            
|              |  | Eric J. Draut           |  |                                                     
|              |  |                         |  |                                                     
|March 6, 2014 |  | /s/ Franklin R. Johnson |  | Director                                            
|              |  | Franklin R. Johnson     |  |                                                     
|              |  |                         |  |                                                     
|March 6, 2014 |  | /s/ Peter E. Schwab     |  | Director                                            
|              |  | Peter E. Schwab         |  |                                                     
|              |  |                         |  |                                                     
|March 6, 2014 |  | /s/ Rajneesh Vig        |  | President                                           
|              |  | Rajneesh Vig            |  |                                                     
|              |  |                         |  |                                                     
|March 6, 2014 |  | /s/ Paul L. Davis       |  | Chief Financial Officer (Principal                  
|              |  | Paul L. Davis           |  | Financial Officer)                                  



90