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NEW YORK–(BUSINESS WIRE)–BlackRock Capital Investment Corporation (NASDAQ:BKCC) (“BCIC” or the “Company,” “we,” “us” or “our”) announced today that its Board of Directors declared a quarterly distribution of $0.14 per share, payable on January 8, 2020 to stockholders of record at the close of business on December 18, 2019.
“During the third quarter, we continued to achieve progress on our strategic priorities of (i) stabilizing NAV by exiting non-core legacy investments in a prudent manner and (ii) deploying more capital into diversified and secured income-producing investments, as the core of our portfolio. The non-core legacy portfolio was 18% of the total portfolio by fair market value at September 30, 2019, compared to 28% and 33% at June 30, 2019 and December 31, 2018, respectively. The quarter over quarter reduction was driven by a successful exit of the second lien and equity position in Vertellus Holdings and related companies during the third quarter. Vertellus was previously the largest position in the non-core portion of the portfolio. The exit of these two positions, along with a partial exit of Vertellus first lien position resulted in $32 million of proceeds, which was $2.2 million below the prior quarter mark. We continue to focus on prudent exits or reductions of the remaining non-core legacy positions which have been a source of NAV volatility,” commented James E. Keenan, Chairman and Interim CEO of the Company.
“Gross and net deployments were $66.8 million and $29.4 million, respectively, during the third quarter. We added five new portfolio companies and made add-on investments into six existing portfolio companies. The increased scale and capabilities of our platform following the integration of Tennenbaum Capital Partners LLC, or TCP, with the Company’s adviser, BlackRock Capital Investment Advisors, LLC is evidenced by the following origination and portfolio composition metrics during the first three quarters of 2019:
“The net unrealized and realized losses of $22.3 million (or $0.33 per share) were primarily concentrated in the non-core legacy investments. The investment in the equity of US Well Services (“USWS”) alone resulted in $11.2 million of unrealized loss (or $0.16 per share), driven by the decline in its public trading price. We anticipate that the valuation of our USWS investment will continue to shift in line with the quarter-end closing prices of the USWS stock.
“On October 29, 2019, the Company’s Board of Directors approved the application to the Company of the 150% minimum asset coverage requirement, as detailed further in this earnings release. As a result, the applicable minimum asset coverage ratio will be reduced from 200% to 150%, effective October 29, 2020 (unless the Company receives earlier stockholder approval). Our goal is to prudently increase leverage from current levels as further non-core exits occur, with a target leverage range of 1.00-1.25x once the reduced asset coverage requirement becomes effective. We believe that the added flexibility will allow the Company to pursue its goal of improving return on equity, while creating a more diversified portfolio of secured income-producing investments.”
Financial Highlights
|
Q3 2019 |
Q2 2019 |
Q3 2018 |
|||||||||
($’s in millions, except per share data) |
Total Amount |
|
Per Share |
|
Total Amount |
|
Per Share |
|
Total Amount |
|
Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income/(loss) |
$9.6 |
|
$0.14 |
|
$11.2 |
|
$0.16 |
|
$12.5 |
|
$0.18 |
|
Net realized and unrealized gains/(losses) |
$(22.3) |
|
$(0.33) |
|
$(21.8) |
|
$(0.31) |
|
$7.9 |
|
$0.11 |
|
Deferred taxes |
— |
|
— |
|
— |
|
— |
|
$(0.4) |
|
$(0.01) |
|
Basic earnings/(losses) |
$(12.7) |
|
$(0.18) |
|
$(10.6) |
|
$(0.15) |
|
$20.0 |
|
$0.28 |
|
Distributions declared |
$9.6 |
|
$0.14 |
|
$12.4 |
|
$0.18 |
|
$12.8 |
|
$0.18 |
|
Net Investment Income/(loss), as adjusted1 |
$9.6 |
|
$0.14 |
|
$11.2 |
|
$0.16 |
|
$12.5 |
|
$0.18 |
|
Basic earnings/(losses), as adjusted1 |
$(12.7) |
|
$(0.18) |
|
$(10.6) |
|
$(0.15) |
|
$20.0 |
|
$0.28 |
|
($’s in millions, except per share data) |
September 30, 2019 |
June 30, 2019 |
December 31, 2018 |
September 30, 2018 |
||||
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Total assets |
$742.7 |
|
$756.7 |
|
$693.6 |
|
$799.5 |
|
Investment portfolio, at fair market value |
$725.9 |
|
$718.7 |
|
$671.7 |
|
$780.6 |
|
Debt outstanding |
$276.1 |
|
$252.7 |
|
$186.4 |
|
$233.0 |
|
Total net assets |
$446.8 |
|
$469.1 |
|
$487.0 |
|
$543.2 |
|
Net asset value per share |
$6.49 |
|
$6.82 |
|
$7.07 |
|
$7.66 |
|
Net leverage ratio2 |
0.61x |
|
0.53x |
|
0.36x |
|
0.43x |
|
1 Non-GAAP basis financial measure. See Supplemental Information on page 8. |
2 Calculated as the ratio between (A) debt, excluding unamortized debt issuance costs, less available cash and receivable for investments sold plus payables for investments purchased, and (B) NAV. |
Business Updates
Portfolio and Investment Activity*
($’s in millions) |
Three Months |
Three Months |
Three Months |
|||
|
|
|
|
|
|
|
Investment deployments |
$66.8 |
|
$105.6 |
|
$70.7 |
|
Investment exits |
$37.4 |
|
$45.6 |
|
$74.5 |
|
Number of portfolio company investments at the end of period |
43 |
|
38 |
|
28 |
|
Weighted average yield of debt and income producing equity securities, at fair market value |
11.0% |
|
11.7% |
|
11.2% |
|
% of Portfolio invested in Secured debt, at fair market value |
57% |
|
53% |
|
49% |
|
% of Portfolio invested in Unsecured debt, at fair market value |
21% |
|
21% |
|
21% |
|
% of Portfolio invested in Equity, at fair market value |
22% |
|
26% |
|
30% |
|
Average investment by portfolio company, at amortized cost (excluding investments below $5.0 million) |
$22.8 |
|
$25.0 |
|
$34.1 |
|
*Balance sheet amounts above are as of period end |
Third Quarter Financial Updates
Liquidity and Capital Resources
Conference Call
BlackRock Capital Investment Corporation will host a webcast/teleconference at 10:00 a.m. (Eastern Time) on Thursday, October 31, 2019, to discuss its third quarter 2019 financial results. All interested parties are welcome to participate. You can access the teleconference by dialing, from the United States, (888) 220-8451, or from outside the United States, +1-720-452-9217, 10 minutes before 10:00 a.m. and referencing the BlackRock Capital Investment Corporation Conference Call (ID Number 6781438). A live, listen-only webcast will also be available via the Investor Relations section of www.blackrockbkcc.com.
Both the teleconference and webcast will be available for replay by 1:00 p.m. on Thursday, October 31, 2019 and ending at 1:00 p.m. on Thursday, November 14, 2019. To access the replay of the teleconference, callers from the United States should dial (888) 203-1112 and callers from outside the United States should dial (719) 457-0820 and enter the Conference ID Number 6781438.
Prior to the webcast/teleconference, an investor presentation that complements the earnings conference call will be posted to BlackRock Capital Investment Corporation’s website within the Presentations section of the Investors page (http://www.blackrockbkcc.com/news-and-events/disclaimer).
About BlackRock Capital Investment Corporation
BlackRock Capital Investment Corporation is a business development company that provides debt and equity capital to middle-market companies.
The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in middle-market companies in the form of senior and junior secured and unsecured debt securities and loans, each of which may include an equity component, and by making direct preferred, common and other equity investments in such companies.
BlackRock Capital Investment Corporation Consolidated Statements of Assets and Liabilities |
||||
|
September 30, 2019 |
December 31, 2018 |
||
Assets |
|
|
|
|
Investments at fair value: |
|
|
|
|
Non-controlled, non-affiliated investments (cost of $368,883,039 and $233,331,450) |
$355,908,897 |
|
$200,569,644 |
|
Non-controlled, affiliated investments (cost of $68,533,450 and $130,892,674) |
26,915,558 |
|
111,727,234 |
|
Controlled investments (cost of $383,997,209 and $388,870,375) |
343,107,836 |
|
359,356,068 |
|
Total investments at fair value (cost of $821,413,698 and $753,094,499) |
725,932,291 |
|
671,652,946 |
|
Cash and cash equivalents |
3,407,997 |
|
13,497,320 |
|
Receivable for investments sold |
585,968 |
|
1,691,077 |
|
Interest, dividends and fees receivable |
10,553,452 |
|
4,084,001 |
|
Prepaid expenses and other assets |
2,170,461 |
|
2,707,036 |
|
Total Assets |
$742,650,169 |
|
$693,632,380 |
|
Liabilities |
|
|
|
|
Debt (net of deferred financing costs of $2,533,696 and $3,227,965) |
$276,120,037 |
|
$186,397,728 |
|
Interest and credit facility fees payable |
2,674,247 |
|
722,841 |
|
Distributions payable |
9,637,075 |
|
12,552,212 |
|
Base management fees payable |
3,230,147 |
|
3,494,520 |
|
Incentive fee payable |
872,695 |
|
— |
|
Payable for investments purchased |
— |
|
989,460 |
|
Accrued administrative services |
330,073 |
|
376,507 |
|
Other accrued expenses and payables |
2,965,956 |
|
2,078,958 |
|
Total Liabilities |
295,830,230 |
|
206,612,226 |
|
Net Assets |
|
|
|
|
Common stock, par value $.001 per share, 200,000,000 common shares authorized, |
|
|
|
|
77,861,287 and 77,861,287 issued and 68,836,255 and 68,921,798 outstanding |
77,861 |
|
77,861 |
|
Paid-in capital in excess of par |
853,248,794 |
|
853,248,794 |
|
Distributable earnings (losses) |
(343,837,461) |
|
(304,106,473) |
|
Treasury stock at cost, 9,025,032 and 8,939,489 shares held |
(62,669,255) |
|
(62,200,028) |
|
Total Net Assets |
446,819,939 |
|
487,020,154 |
|
Total Liabilities and Net Assets |
$742,650,169 |
|
$693,632,380 |
|
Net Asset Value Per Share |
$6.49 |
|
$7.07 |
|
BlackRock Capital Investment Corporation |
||||||||
|
|
Three Months Ended September 30, 2019 |
|
Three Months Ended September 30, 2018 |
|
Nine Months Ended September 30, 2019 |
|
Nine Months Ended September 30, 2018 |
Investment Income: |
|
|
|
|
|
|
|
|
Non-controlled, non-affiliated investments: |
|
|
|
|
|
|
|
|
Cash interest income |
|
$8,167,397 |
|
$6,355,510 |
|
$20,922,567 |
|
$21,680,075 |
PIK interest income |
|
362,757 |
|
285,387 |
|
858,865 |
|
285,387 |
Fee income |
|
441,537 |
|
314,103 |
|
1,354,283 |
|
1,062,810 |
Total investment income from non-controlled, non-affiliated investments |
|
8,971,691 |
|
6,955,000 |
|
23,135,715 |
|
23,028,272 |
Non-controlled, affiliated investments: |
|
|
|
|
|
|
|
|
Cash interest income |
|
937,710 |
|
2,341,479 |
|
3,364,592 |
|
7,464,526 |
PIK interest income |
|
114,221 |
|
719,007 |
|
128,622 |
|
1,409,967 |
PIK dividend income |
|
— |
|
193,227 |
|
220,480 |
|
573,379 |
Fee income |
|
1,604 |
|
— |
|
1,604 |
|
35,000 |
Total investment income from non-controlled, affiliated investments |
|
1,053,535 |
|
3,253,713 |
|
3,715,298 |
|
9,482,872 |
Controlled investments: |
|
|
|
|
|
|
|
|
Cash interest income |
|
4,967,220 |
|
6,608,904 |
|
17,727,023 |
|
17,425,381 |
PIK interest income |
|
1,057,151 |
|
191,253 |
|
2,017,417 |
|
1,474,466 |
Cash dividend income |
|
3,878,092 |
|
3,678,572 |
|
12,172,960 |
|
10,295,858 |
PIK dividend income |
|
— |
|
— |
|
— |
|
731,516 |
Fee income |
|
3,199 |
|
321,463 |
|
128,299 |
|
711,788 |
Total investment income from controlled investments |
|
9,905,662 |
|
10,800,192 |
|
32,045,699 |
|
30,639,009 |
Other income |
|
25,296 |
|
— |
|
30,371 |
|
— |
Total investment income |
|
19,956,184 |
|
21,008,905 |
|
58,927,083 |
|
63,150,153 |
Expenses: |
|
|
|
|
|
|
|
|
Base management fees |
|
3,230,146 |
|
3,481,000 |
|
9,173,908 |
|
10,644,268 |
Incentive management fees |
|
2,101,954 |
|
2,497,266 |
|
6,628,725 |
|
6,153,967 |
Interest and credit facility fees |
|
4,312,944 |
|
3,743,694 |
|
11,466,706 |
|
11,441,909 |
Professional fees |
|
814,820 |
|
212,430 |
|
1,783,336 |
|
1,564,350 |
Administrative services |
|
330,072 |
|
355,238 |
|
1,031,012 |
|
1,326,216 |
Director fees |
|
185,250 |
|
181,000 |
|
553,250 |
|
546,000 |
Investment advisor expenses |
|
87,500 |
|
87,500 |
|
262,500 |
|
262,500 |
Other |
|
485,682 |
|
461,711 |
|
1,512,742 |
|
1,717,928 |
Total expenses, before incentive management fee waiver |
|
11,548,368 |
|
11,019,839 |
|
32,412,179 |
|
33,657,138 |
Incentive management fee waiver |
|
(1,229,259) |
|
(2,497,266) |
|
(5,756,030) |
|
(6,153,967) |
Expenses, net of incentive management fee waiver |
|
10,319,109 |
|
8,522,573 |
|
26,656,149 |
|
27,503,171 |
Net Investment Income |
|
9,637,075 |
|
12,486,332 |
|
32,270,934 |
|
35,646,982 |
|
|
|
|
|
|
|
|
|
Realized and Unrealized Gain (Loss): |
|
|
|
|
|
|
|
|
Net realized gain (loss): |
|
|
|
|
|
|
|
|
Non-controlled, non-affiliated investments |
|
— |
|
488,772 |
|
(23,395,840) |
|
(46,107,825) |
Non-controlled, affiliated investments |
|
(76,161) |
|
— |
|
(345,387) |
|
— |
Controlled investments |
|
— |
|
(2,644,230) |
|
— |
|
(28,759,662) |
Net realized gain (loss) |
|
(76,161) |
|
(2,155,458) |
|
(23,741,227) |
|
(74,867,487) |
Net change in unrealized appreciation (depreciation) on: |
|
|
|
|
|
|
|
|
Non-controlled, non-affiliated investments |
|
(1,013,109) |
|
(4,724,274) |
|
20,131,296 |
|
24,416,981 |
Non-controlled, affiliated investments |
|
(13,565,504) |
|
1,795,922 |
|
(22,796,087) |
|
16,952,593 |
Controlled investments |
|
(7,594,669) |
|
12,895,555 |
|
(11,375,067) |
|
23,540,227 |
Foreign currency translation |
|
(79,775) |
|
116,642 |
|
197,292 |
|
(208,413) |
Net change in unrealized appreciation (depreciation) |
|
(22,253,057) |
|
10,083,845 |
|
(13,842,566) |
|
64,701,388 |
Net realized and unrealized gain (loss) before taxes |
|
(22,329,218) |
|
7,928,387 |
|
(37,583,793) |
|
(10,166,099) |
Deferred taxes |
|
— |
|
(409,765) |
|
— |
|
(2,220,156) |
Net realized and unrealized gain (loss) after taxes |
|
(22,329,218) |
|
7,518,622 |
|
(37,583,793) |
|
(12,386,255) |
Net Increase (Decrease) in Net Assets Resulting from Operations |
|
$(12,692,143) |
|
$20,004,954 |
|
$(5,312,859) |
|
$23,260,727 |
Net Investment Income Per Share—basic |
|
$0.14 |
|
$0.18 |
|
$0.47 |
|
$0.50 |
Earnings (Loss) Per Share—basic |
|
$(0.18) |
|
$0.28 |
|
$(0.08) |
|
$0.32 |
Average Shares Outstanding—basic |
|
68,836,255 |
|
71,008,615 |
|
68,836,702 |
|
71,892,278 |
Net Investment Income Per Share—diluted |
|
$0.14 |
|
$0.17 |
|
$0.45 |
|
$0.48 |
Earnings (Loss) Per Share—diluted |
|
$(0.18) |
|
$0.25 |
|
$(0.08) |
|
$0.32 |
Average Shares Outstanding—diluted |
|
85,829,992 |
|
88,002,352 |
|
85,830,439 |
|
88,886,015 |
Distributions Declared Per Share |
|
$0.14 |
|
$0.18 |
|
$0.50 |
|
$0.54 |
Supplemental Information
The Company reports its financial results on a generally accepted accounting principles (“GAAP”) basis; however, management believes that evaluating the Company’s ongoing operating results may be enhanced if investors have additional non-GAAP basis financial measures. Management reviews non-GAAP financial measures to assess ongoing operations and, for the reasons described below, considers them to be effective indicators, for both management and investors, of the Company’s financial performance over time.
Contacts
Investor Contact:
Nik Singhal
212.810.5427
Press Contact:
Brian Beades
212.810.5596
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