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 $0.18 per share, payable
on October 8, 2018 to stockholders of record at the close of business on
September 17, 2018.
“We continued to execute upon our disciplined deployment strategy in the
second quarter, adding two new portfolio companies to our balance sheet
as well as making incremental investments in four existing portfolio
companies including BCIC Senior Loan Partners (“Senior Loan Partners”).
We saw multiple exits during the quarter driving the decrease in net
leverage from 0.56x to 0.43x quarter-over quarter. Additionally, the
reduction in NAV that we experienced was mainly due to markdowns on
certain legacy investments. Under BlackRock’s management of BCIC, from
March 6, 2015 to June 30, 2018, we have deployed $860 million of
capital, of which $290 million has been exited with a realized IRR of
13.8%” commented James E. Keenan, Chairman and Interim CEO of BlackRock
Capital Investment Corporation.
“In the current market conditions of compressed credit spreads, higher
leverage levels and weaker structures, we remain highly selective in new
investment opportunities and focused on opportunities with strong
underlying credit metrics. Additionally, our portfolio investments in
Senior Loan Partners and Gordon Brothers Finance Company continue to
provide us with exposure to assets at the top of the capital structure.
Senior Loan Partners upsized its committed equity base as well as
refinanced and upsized its credit facility expanding its investable
capacity from $300 million to $400 million.
“Under our existing share repurchase program, during the quarter, we
invested approximately $7.9 million in share repurchases at an average
price of $6.21 per share. With liquidity at $280 million and no debt
maturities until 2022, we have significant operating flexibility and
deployment capacity.”
Financial Highlights
0.19
Basic earnings/(loss), as adjusted1
2018
2018
2017
2017
Net leverage ratio2
Business Updates
_______________________________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,
and (B) net asset value.
Portfolio and Investment Activity*
*balance sheet amounts above are as of period end
Second 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, August
2, 2018, to discuss its second quarter 2018 financial results. All
interested parties are welcome to participate. You can access the
teleconference by dialing, from the United States, (800) 263-0877, or
from outside the United States, +1-646-828-8143, shortly before 10:00
a.m. and referencing the BlackRock Capital Investment Corporation
Conference Call (ID Number 2195695). 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, August 2, 2018 and ending at 1:00 p.m. on Thursday,
August 16, 2018. 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 +1-719-457-0820 and enter the
Conference ID Number 2195695.
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
(Unaudited)
June 30,
December 31,
2018
2017
BlackRock Capital Investment Corporation
Consolidated Statements of Operations
(Unaudited)
Supplemental Information
The Company reports its financial results on a 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. The
Company’s management does not advocate that investors consider such
non-GAAP financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
Until March 6, 2017, the Company recorded its liability for incentive
management fees based on income as it became legally obligated to pay
them, based on a hypothetical liquidation at the end of each reporting
period. The Company’s obligation to pay incentive management fees with
respect to any fiscal quarter until March 6, 2017 was based on a formula
that reflects the Company’s results over a trailing four-fiscal quarter
period ending with the pro-rated period until March 6, 2017. The Company
is legally obligated to pay the amount resulting from the formula less
any cash payments of incentive management fees during the prior three
quarters. The formula’s requirement to reduce the incentive management
fee by amounts paid with respect to such fees in the prior three
quarters caused the Company’s incentive management fee expense to become
concentrated in the fourth quarter of each year. Management believes
that reflecting incentive management fees throughout the year, as the
related investment income is earned, is an effective measure of the
Company’s profitability and financial performance that facilitates
comparison of current results with historical results and with those of
the Company’s peers. The Company’s “as adjusted” results reflect
incentive management fees based on the formula the Company utilizes for
each trailing four-fiscal quarter period until March 6, 2017, with the
formula applied to each quarter’s incremental earnings and without any
reduction for incentive management fees paid during the prior three
quarters. The resulting amount represents an upper limit of each
quarter’s incremental incentive management fees that the Company may
become legally obligated to pay at the end of the year. Prior year
amounts are estimated in the same manner. These estimates represent
upper limits because, in any calendar year, subsequent quarters’
investment underperformance could reduce the incentive management fees
payable by the Company with respect to prior quarters’ operating
results. After March 6, 2017, incentive management fees based on income
have been calculated for each calendar quarter and are paid on a
quarterly basis if certain thresholds are met. The Company records its
liability for incentive management fees based on capital gains by
performing a hypothetical liquidation at the end of each reporting
period. The accrual of this hypothetical capital gains incentive
management fee is required by GAAP, but it should be noted that a fee so
calculated and accrued is not due and payable until the end of the
measurement period, or every June 30. The incremental incentive
management fees disclosed for a given period are not necessarily
indicative of actual full year results. Changes in the economic
environment, financial markets and other parameters used in determining
such estimates could cause actual results to differ and such differences
could be material. In addition, on March 7, 2017, BlackRock Advisors, in
consultation with the Company’s Board of Directors, agreed to waive
incentive fees based on income after March 6, 2017 to December 31, 2018.
BCIA has agreed to honor such waiver. For a more detailed description of
the Company’s incentive management fee, please refer to the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2017,
on file with the Securities and Exchange Commission (“SEC”).
Computations for the periods below are derived from the Company’s
financial statements as follows:
Three months
Three months
Six months
Six months
ended
ended
ended
ended
June 30, 2018
June 30, 2017
June 30, 2018
June 30, 2017
11,537,704
13,869,296
23,160,650
28,434,596
Note: The Net Investment Income amounts for the three and six months
ended June 30, 2018 are net of incentive management fees based on income
and a corresponding incentive management fee waiver in the amounts of
$1,921,506 and $3,656,701, respectively. For the periods shown, there is
no difference between the GAAP and as adjusted figures; however, there
may be a difference in future periods.
1
Pre-Incentive Fee: Amounts are adjusted to remove all
incentive management fees. Such fees are calculated but not
necessarily due and payable at this time.
2
As Adjusted: Amounts are adjusted to remove the incentive
management fee expense based on gains, as required by GAAP, and to
include only the incremental incentive management fee expense
based on Income. Until March 6, 2017, the incremental incentive
management fee was calculated based on the current quarter’s
incremental earnings, and without any reduction for incentive
management fees paid during the prior calendar quarters. After
March 6, 2017, incentive management fee expense based on income
has been calculated for each calendar quarter and may be paid on a
quarterly basis if certain thresholds are met. Amounts reflect the
Company’s ongoing operating results and reflect the Company’s
financial performance over time.
Forward-looking statements
This press release, and other statements that BlackRock Capital
Investment Corporation may make, may contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act, with
respect to BlackRock Capital Investment Corporation’s future financial
or business performance, strategies or expectations. Forward-looking
statements are typically identified by words or phrases such as “trend,”
“potential,” “opportunity,” “pipeline,” “believe,” “comfortable,”
“expect,” “anticipate,” “current,” “intention,” “estimate,” “position,”
“assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,”
“seek,” “achieve,” and similar expressions, or future or conditional
verbs such as “will,” “would,” “should,” “could,” “may” or similar
expressions.
BlackRock Capital Investment Corporation cautions that forward-looking
statements are subject to numerous assumptions, risks and uncertainties,
which may change over time. Forward-looking statements speak only as of
the date they are made, and BlackRock Capital Investment Corporation
assumes no duty to and does not undertake to update forward-looking
statements. Actual results could differ materially from those
anticipated in forward-looking statements and future results could
differ materially from historical performance.
In addition to factors previously disclosed in BlackRock Capital
Investment Corporation’s SEC reports and those identified elsewhere in
this press release, the following factors, among others, could cause
actual results to differ materially from forward-looking statements or
historical performance: (1) our future operating results; (2) our
business prospects and the prospects of our portfolio companies; (3) the
impact of investments that we expect to make; (4) our contractual
arrangements and relationships with third parties; (5) the dependence of
our future success on the general economy and its impact on the
industries in which we invest; (6) the financial condition of and
ability of our current and prospective portfolio companies to achieve
their objectives; (7) our expected financings and investments; (8) the
adequacy of our cash resources and working capital, including our
ability to obtain continued financing on favorable terms; (9) the timing
of cash flows, if any, from the operations of our portfolio companies;
(10) the impact of increased competition; (11) the ability of our
investment advisor to locate suitable investments for us and to monitor
and administer our investments; (12) potential conflicts of interest in
the allocation of opportunities between us and other investment funds
managed by our investment advisor or its affiliates; (13) the ability of
our investment advisor to attract and retain highly talented
professionals; (14) changes in law and policy accompanying the new
administration and uncertainty pending any such changes; (15) increased
geopolitical unrest, terrorist attacks or acts of war, which may
adversely affect the general economy, domestic and local financial and
capital markets, or the specific industries of our portfolio companies;
(16) changes and volatility in political, economic or industry
conditions, the interest rate environment, foreign exchange rates or
financial and capital markets; (17) the unfavorable resolution of legal
proceedings; and (18) the impact of changes to tax legislation and,
generally, our tax position.
BlackRock Capital Investment Corporation’s Annual Report on Form 10-K
for the year ended December 31, 2017, filed with the SEC identifies
additional factors that can affect forward-looking statements.
Available Information
BlackRock Capital Investment Corporation’s filings with the SEC, press
releases, earnings releases and other financial information are
available on its website at www.blackrockbkcc.com.
The information contained on our website is not a part of this press
release.
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