BlackRock TCP Capital Corp. (“we,” “us,” “our,” “TCPC” or the
“Company”), a business development company (NASDAQ: TCPC), today
announced its financial results for the first quarter ended March
31, 2020 and filed its Form 10-Q with the U.S. Securities and
Exchange Commission.
FINANCIAL HIGHLIGHTS
- Net investment income for the quarter ended March 31, 2020 was
$22.1 million, or $0.38 per share on a diluted basis, exceeding the
dividend of $0.36 per share.
- Net decrease in net assets resulting from operations for the
quarter ended March 31, 2020 was $69.5 million, or $1.18 per share,
due to unrealized losses as a result of spread widening, market
volatility and related concerns following the COVID-19 market and
economic activity disruptions.
- Net asset value per share at March 31, 2020 was $11.76 compared
to $13.21 at December 31, 2019, a decline of 11.0%. Over the same
period, unrealized losses net of realized gains were 5.5% of the
portfolio.
- During the three months ended March 31, 2020, the Company
repurchased 1 million shares of its common stock at a
weighted-average price of $6.10 per share, which added $0.09 per
share to NAV.
- Total acquisitions during the quarter ended March 31, 2020 were
$143.0 million and total dispositions were $76.9 million.
- No non-accruals were added during the first quarter. As of
March 31, 2020, loans on non-accrual status represented 0.2% of the
portfolio at fair value and 0.8% at cost.
- On January 31, 2020, Fitch Ratings initiated an investment
grade rating of BBB-. The Company continues to be investment grade
rated by both Fitch Ratings and Moody’s Investor Service.
- In April 2020, the Company extended the maturity of its $270
million SVCP credit facility to May 6, 2024. The interest rate on
the facility remained unchanged at LIBOR + 2.00%.
- On May 11, 2020, our board of directors declared a second
quarter regular dividend of $0.36 per share payable on June 30,
2020 to stockholders of record as of the close of business on June
16, 2020.
"While the COVID-19 pandemic caused significant market
disruption in the first quarter, our highly diversified portfolio
of primarily senior secured investments with an emphasis on less
cyclical industries continued to perform well, and we had no new
nonaccruals during the quarter," said Howard Levkowitz, BlackRock
TCP Capital Corp. Chairman and CEO. "We continue to have a strong
liquidity position given our diversified and well-laddered leverage
program, including two credit facilities, three unsecured notes and
an SBA program. Our entire team is focused on helping our borrowers
navigate this crisis, while preserving capital for our
shareholders."
PORTFOLIO AND INVESTMENT ACTIVITY
As of March 31, 2020, our investment portfolio consisted of debt
and equity positions in 108 portfolio companies with a total fair
value of approximately $1.6 billion. Debt positions represented
approximately 94% of the portfolio at fair value, with 93% of the
portfolio comprised of senior secured debt. Of the 92% of our debt
investments that were floating rate, 66% had interest rate floors.
Equity positions, including equity interests in portfolios of debt
and lease assets, represented approximately 6% of our investment
portfolio.
As of March 31, 2020, the weighted average annual effective
yield of our debt portfolio was unchanged at approximately 10.3%(1)
and the weighted average annual effective yield of our total
portfolio was approximately 9.8%. Debt investments in two portfolio
companies were on non-accrual status as of March 31, 2020,
representing 0.2% of the portfolio at fair value and 0.8% at
cost.
During the three months ended March 31, 2020, we invested
approximately $143.0 million, primarily in 13 investments,
comprised of 6 new and 7 existing portfolio companies. The
investments included approximately $134.2 million in senior secured
loans. The remaining $8.8 million was comprised primarily of $4.2
million in unsecured notes and $4.6 million in equity investments,
including $4.0 million in equity interests in portfolios of debt
and lease assets and $0.6 million in equity positions received in
connection with debt investments. Additionally, we received
proceeds from sales and repayments of investment principal of
approximately $76.9 million. We expect to continue to invest in
senior secured loans, bonds and subordinated debt, as well as
select equity investments, to obtain a high level of current
income, with an emphasis on principal protection.
As of March 31, 2020, total assets were $1.7 billion, net assets
were $679.6 million and net asset value per share was $11.76, as
compared to $1.7 billion, $776.3 million, and $13.21 per share,
respectively, as of December 31, 2019.
CONSOLIDATED RESULTS OF OPERATIONS
Total investment income for the three months ended March 31,
2020 was approximately $41.3 million, or $0.70 per share, and
reflected the impact of lower base interest rates on our portfolio.
Since December 31, 2018, 3-month LIBOR has decreased 135 basis
points to 1.45% as of March 31, 2020, which reduced our quarterly
net investment income run rate by approximately $0.08 cents per
share over the 15-month period. The current rate is substantially
lower. Investment income for the first quarter ended March 31, 2020
included $0.01 per share from prepayment premiums and related
accelerated original issue discount and exit fee amortization,
$0.04 per share from recurring original issue discount and exit fee
amortization, and $0.04 per share from recurring income paid in
kind. This reflects our policy of recording interest income,
adjusted for amortization of premiums and discounts, on an accrual
basis. Origination, structuring, closing, commitment, and similar
upfront fees received in connection with the outlay of capital are
generally amortized into interest income over the life of the
respective debt investment.
Total operating expenses for the three months ended March 31,
2020 were approximately $19.2 million, or $0.33 per share,
including interest and other debt expenses of $11.0 million, or
$0.19 per share. There was no incentive compensation for the three
months ended March 31, 2020 as a result of our cumulative total
return not exceeding the total return hurdle. Excluding interest
and other debt expenses, annualized first quarter expenses were
5.8% of average net assets.
Net investment income for the three months ended March 31, 2020
was approximately $22.1 million, or $0.38 per share.
Net unrealized losses for the three months ended March 31, 2020
were $96.5 million, or $1.64 per share, primarily driven by spread
widening and volatility across our portfolio related to the market
impact of COVID-19. Net realized gains for the three months ended
March 31, 2020 were $5.0 million, or $0.08 per share, comprised
primarily of a $4.9 million gain on the disposition of our
investment in STG-Fairway (First Advantage), exclusive of
prepayment income earned.
Net decrease in net assets resulting from operations for the
three months ended March 31, 2020 was $69.5 million, or $1.18 per
share.
__________________________
(1) Weighted average annual effective
yield includes amortization of deferred debt origination and
end-of-term fees and accretion of original issue discount, but
excludes market discount and any prepayment and make-whole fee
income. The weighted average effective yield on our debt portfolio
excludes any debt investments that are distressed or on non-accrual
status.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2020, available liquidity was approximately
$262.9 million, comprised of approximately $258.6 million in
available capacity under our leverage program, $8.6 million in cash
and cash equivalents and approximately $4.3 million in net
outstanding settlements of investments purchased.
The combined weighted-average interest rate on debt outstanding
at March 31, 2020 was 3.73%.
Total debt outstanding at March 31, 2020 was as follows:
Maturity
Rate
Carrying Value (1)
Available
Total
Capacity
SVCP Facility
2023 (5)
L+2.00%
(2)
$
108,362,940
$
161,637,060
$
270,000,000
TCPC Funding Facility
2023
L+2.00%
(3)
215,000,000
85,000,000
300,000,000
SBA Debentures
2024−2029
2.63%
(4)
138,000,000
12,000,000
150,000,000
2022 Convertible Notes ($140 million
par)
2022
4.625%
138,739,857
—
138,739,857
2022 Notes ($175 million par)
2022
4.125%
174,681,290
—
174,681,290
2024 Notes ($200 million par)
2024
3.900%
197,891,341
—
197,891,341
Total leverage
972,675,428
$
258,637,060
$
1,231,312,488
Unamortized issuance costs
(7,217,414
)
Debt, net of unamortized issuance
costs
$
965,458,014
(1)
Except for the convertible notes, the 2022
Notes and the 2024 Notes, all carrying values are the same as the
principal amounts outstanding.
(2)
As of March 31, 2020, $8.2 million of the
outstanding amount bore interest at a rate of EURIBOR + 2.00%
(3)
Subject to certain funding
requirements
(4)
Weighted-average interest rate, excluding
fees of 0.36% or 0.35%
(5)
In April 2020, the maturity was extended
to May 6, 2024
On April 30, 2020, our board of directors re-approved our stock
repurchase plan to acquire up to $50 million in the aggregate of
our common stock at prices at certain thresholds below our net
asset value per share, in accordance with the guidelines specified
in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of
1934. During the quarter ended March 31, 2020, we repurchased
1,000,000 shares for a total cost of $6.1 million.
RECENT DEVELOPMENTS
In April 2020, the Company extended the maturity of its $270
million SVCP credit facility to May 6, 2024. The interest rate on
the facility remained unchanged at LIBOR + 2.00%.
On May 11, 2020, the Company’s board of directors declared a
second quarter regular dividend of $0.36 per share payable on June
30, 2020 to stockholders of record as of the close of business on
June 16, 2020. We continue to monitor the current market
environment, including changes in interest rates, the potential for
realized and unrealized gains or losses in the portfolio, and the
level of loans on non-accrual as part of our ongoing discussions
with the Board to determine the most appropriate dividend policy
for the Company’s shareholders.
CONFERENCE CALL AND WEBCAST
BlackRock TCP Capital Corp. will host a conference call on
Tuesday, May 12, 2020 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific
Time) to discuss its financial results. All interested parties are
invited to participate in the conference call by dialing (866)
393-0571; international callers should dial (206) 453-2872.
Participants should enter the Conference ID 4496928 when prompted.
For a slide presentation that we intend to refer to on the earnings
conference call, please visit the Investor Relations section of our
website (www.tcpcapital.com) and click on the First Quarter 2020
Investor Presentation under Events and Presentations. The
conference call will be webcast simultaneously in the investor
relations section of our website at
http://investors.tcpcapital.com/. An archived replay of the call
will be available approximately two hours after the live call,
through May 19, 2020. For the replay, please visit
https://investors.tcpcapital.com/events-and-presentations or dial
(855) 859-2056. For international replay, please dial (404)
537-3406. For all replays, please reference program ID number
4496928.
BlackRock TCP Capital
Corp.
Consolidated Statements of
Assets and Liabilities
March 31, 2020
December 31, 2019
(unaudited)
Assets
Investments, at fair value:
Companies less than 5% owned (cost of
$1,550,870,770 and $1,483,508,500, respectively)
$
1,468,734,301
$
1,474,318,011
Companies 5% to 25% owned (cost of
$76,568,077 and $70,112,667, respectively)
63,901,597
75,880,291
Companies more than 25% owned (cost of
$134,870,172 and $135,655,840, respectively)
93,282,976
99,308,593
Total investments (cost of $1,762,309,019
and $1,689,277,007, respectively)
1,625,918,874
1,649,506,895
Cash and cash equivalents
8,574,859
44,848,539
Accrued interest income:
Companies less than 5% owned
17,329,567
16,937,339
Companies 5% to 25% owned
729,805
665,165
Companies more than 25% owned
349,945
305,721
Deferred debt issuance costs
5,073,471
5,476,382
Receivable for investments sold
510,570
1,316,667
Prepaid expenses and other assets
4,917,342
3,012,488
Total assets
1,663,404,433
1,722,069,196
Liabilities
Debt, net of unamortized issuance costs of
$7,217,414 and $7,711,684, respectively
965,458,014
907,802,387
Management and advisory fees payable
5,930,289
5,429,075
Payable for investments purchased
4,825,000
13,057,446
Interest payable
4,424,813
10,837,121
Payable to the Advisor
1,344,290
1,591,651
Incentive compensation payable
—
4,753,671
Accrued expenses and other liabilities
1,838,116
2,279,459
Total liabilities
983,820,522
945,750,810
Net assets
$
679,583,911
$
776,318,386
Composition of net assets
Common stock, $0.001 par value;
200,000,000 shares authorized, 57,766,912 and 58,766,426 shares
issued and outstanding as of March 31, 2020 and December 31, 2019,
respectively
$
57,767
$
58,766
Paid-in capital in excess of par
991,283,210
997,379,362
Distributable earnings (loss)
(311,757,066
)
(221,119,742
)
Net assets
$
679,583,911
$
776,318,386
Net assets per share
$
11.76
$
13.21
BlackRock TCP Capital
Corp.
Consolidated Statements of
Operations (Unaudited)
Three Months Ended March 31,
2020
2019
Investment income
Interest income (excluding PIK):
Companies less than 5% owned
$
35,989,337
$
42,956,654
Companies 5% to 25% owned
552,275
729,267
Companies more than 25% owned
1,676,256
896,257
PIK interest income:
Companies less than 5% owned
1,411,631
1,678,016
Companies 5% to 25% owned
1,002,130
716,626
Dividend income:
Companies more than 25% owned
428,419
480,404
Lease income:
Companies more than 25% owned
38,136
74,457
Other income:
Companies less than 5% owned
153,014
8,848
Total investment income
41,251,198
47,540,529
Operating expenses
Interest and other debt expenses
10,955,646
10,687,633
Management and advisory fees
6,117,043
6,034,741
Administrative expenses
539,947
599,559
Legal fees, professional fees and due
diligence expenses
498,410
437,137
Director fees
232,232
188,798
Insurance expense
175,080
127,328
Custody fees
111,667
99,609
Incentive fee
—
5,353,416
Other operating expenses
568,249
692,210
Total operating expenses
19,198,274
24,220,431
Net investment income
22,052,924
23,320,098
Realized and unrealized gain (loss) on
investments and foreign currency
Net realized gain (loss):
Investments in companies less than 5%
owned
4,794,459
(300,322
)
Investments in companies 5% to 25%
owned
—
43,320
Investments in companies more than 25%
owned
162,012
—
Net realized gain (loss)
4,956,471
(257,002
)
Change in net unrealized
appreciation/depreciation
(96,490,806
)
1,058,724
Net realized and unrealized gain
(loss)
(91,534,335
)
801,722
Net increase (decrease) in net assets
resulting from operations
$
(69,481,411
)
$
24,121,820
Basic and diluted earnings (loss) per
common share
$
(1.18
)
$
0.41
Basic and diluted weighted average
common shares outstanding
58,668,432
58,767,442
ABOUT BLACKROCK TCP CAPITAL CORP.
BlackRock TCP Capital Corp. (NASDAQ: TCPC) is a specialty
finance company focused on direct lending to middle-market
companies as well as small businesses. TCPC lends primarily to
companies with established market positions, strong regional or
national operations, differentiated products and services and
sustainable competitive advantages, investing across industries in
which it has significant knowledge and expertise. TCPC’s investment
objective is to achieve high total returns through current income
and capital appreciation, with an emphasis on principal protection.
TCPC is a publicly-traded business development company, or BDC,
regulated under the Investment Company Act of 1940 and is
externally managed by its advisor, Tennenbaum Capital Partners,
LLC, a wholly-owned, indirect subsidiary of BlackRock, Inc. For
more information, visit www.tcpcapital.com.
FORWARD-LOOKING STATEMENTS
Prospective investors considering an investment in BlackRock TCP
Capital Corp. should consider the investment objectives, risks and
expenses of the company carefully before investing. This
information and other information about the company are available
in the company’s filings with the Securities and Exchange
Commission (“SEC”). Copies are available on the SEC’s website at
www.sec.gov and the company’s website at www.tcpcapital.com.
Prospective investors should read these materials carefully before
investing.
This press release may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are based on estimates,
projections, beliefs and assumptions of management of the company
at the time of such statements and are not guarantees of future
performance. Forward-looking statements involve risks and
uncertainties in predicting future results and conditions. Actual
results could differ materially from those projected in these
forward-looking statements due to a variety of factors, including,
without limitation, changes in general economic conditions or
changes in the conditions of the industries in which the company
makes investments, risks associated with the availability and terms
of financing, changes in interest rates, availability of
transactions, and regulatory changes. Certain factors that could
cause actual results to differ materially from those contained in
the forward-looking statements are included in the “Risk Factors”
section of the company’s Form 10-K for the year ended December 31,
2019, and the company’s subsequent periodic filings with the SEC.
Copies are available on the SEC’s website at www.sec.gov and the
company’s website at www.tcpcapital.com. Forward-looking statements
are made as of the date of this press release and are subject to
change without notice. The company has no duty and does not
undertake any obligation to update or revise any forward-looking
statements based on the occurrence of future events, the receipt of
new information, or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200511005858/en/
BlackRock TCP Capital Corp. Katie McGlynn 310-566-1094
investor.relations@tcpcapital.com
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