UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 6, 2017
BLACKROCK CAPITAL INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 814-00712 | 20-2725151 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification Number) |
40 East 52nd Street
New York, NY 10022
(Address of principal executive offices)
(212) 810-5800
(Registrant’s telephone number, including area code)
BlackRock Capital Investment Corporation
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| ITEM 7.01. | REGULATION FD DISCLOSURE. |
The Company is furnishing presentation materials included as Exhibit 99.1 to this report pursuant to Item 7.01 of Form 8-K. The information in this report (including Exhibit 99.1) is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. This report will not be deemed an admission as to the materiality of any information herein (including Exhibit 99.1).
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits.
| Exhibit Number |
Description | |
| 99.1 | Presentation materials, dated as of December 6, 2017 | |
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Presentation materials, dated as of December 6, 2017 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BLACKROCK CAPITAL INVESTMENT CORPORATION | ||||||
| Date: December 6, 2017 | By: | /s/ Michael J. Zugay | ||||
| Name: | Michael J. Zugay | |||||
| Title: | Chief Executive Officer | |||||
Exhibit 99.1
BlackRock Capital Investment Corp (BKCC)
Wells Fargo
Securities Investment Thought Leadership Forum
December 6, 2017
BLACKROCK CAPITAL
I N V E S T M E N T C O R P O R AT I O N
Important Notice
These materials and any
presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer to purchase, any securities of BlackRock Capital Investment Corporation (“BKCC,” the “Company”, “we”, “us” or
“our”). The summary descriptions and other information included herein, and any other materials provided to you by the Company or its representatives, are intended only for informational purposes and convenient reference. The information
contained herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations.
Recipients may not
reproduce these materials or transmit them to third parties. These materials are not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to applicable law or
regulations.
This presentation contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, that are subject to risks and uncertainties. Actual outcomes and results could differ materially from those suggested by this presentation due to the impact of many factors beyond the control of the Company, including those listed in the
“Risk Factors” section of our annual filings with the Securities and Exchange Commission (“SEC”). Any such forward-looking statements are made pursuant to the safe harbor provisions available under applicable securities laws and
BlackRock Capital Investment Corporation assumes no obligation to update or revise any such forward-looking statements.
Certain information discussed in this
presentation was derived from third party sources and has not been independently verified and, accordingly, the Company makes no representation or warranty in respect of this information.
The following slides contain summaries of certain financial and statistical information about the Company. The information contained in this presentation is summary information
that is intended to be considered in the context of our SEC filings and other public announcements that we may make, by press release or otherwise, from time to time. In addition, information related to past performance, while helpful as an
evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of the Company, or information about the market, as indicative of the Company’s future
results.
2
BlackRock Capital Investment Corporation Overview
BlackRock Capital Investment Corporation (NASDAQ: BKCC, or “BCIC”) is a publicly traded and externally-managed BDC (business development company).
Managed by BlackRock Advisors, LLC (“Advisor”), a wholly owned indirect subsidiary of BlackRock, Inc. (“BlackRock”) since March 6, 2015.
BlackRock is the largest asset manager globally with approximately $6.0 trillion under management, as of September 30, 2017.
• BlackRock’s scope and
scale enhances sourcing channels and provides informational advantage via company, sector and macro level insights.
Provides middle-market companies with flexible
financing solutions, including senior and junior secured and unsecured debt securities, as well as equity securities.
Seeks and invests in opportunities which
offer an attractive risk-adjusted return, while creating long-term partnerships with growing middle-market companies.
Experienced investment team possesses strong
sourcing capabilities and sponsor relationships, employs rigorous bottom-up investment analysis and possesses restructuring/M&A skill set.
• 12+ year track record of delivering performance since our inception in 2005.
•
Evaluated approximately 4,000 investment opportunities since inception.
• Completed investments in 181 portfolio companies since inception.
• Approximately $4.5 billion in capital deployed to middle-market companies since inception.
Key Metrics as of September 30, 2017 Market Data as of December 4, 2017
Investment
Portfolio1: Net Assets: Dividend Yield3: $833.9 million $581.5 million or $7.96 per share 2 11.0%
Leverage Ratio4: Distribution Coverage5: Market Cap
($6.55 share price): 0.42x LTM: 106%, Q3 2017: 92% $479.3 million (0.82x book value)
Please see Notes to the Investor Presentation on page 13. Past
performance is not indicative of future results.
3
BlackRock’s Global Credit Platform
James
Keenan Tim O’Hara
Chief Investment Officer and Co-Head of Global Credit
Co-Head of Global Credit
AUM¹: $84 billion
Multi-Strategy Credit Leveraged Finance Hedge Funds Private Credit
Credit Strategies
Incomeï,§ High Yield
Event Driven
Opportunistic Debt
Credit Plus
Bank Loans
Long-Short Credi
tMiddle Market Investing
CLO Tranche Investing
Specialty Finance
BlackRock’s Research and Alternatives Partners are sourcing and information resources
120+ professionals across three regions dedicated to global credit markets
America Europe Asia-Pacific
Platform Specialists
65+ Professionals 30+ Professionals 25+ Professionals
• Risk & Qualitative
Analysis (8+)
• Product Strategists (25+)
• BlackRock Alternative
Specialists (70+)
• Business Management (9+)
Capital Markets &
Research Alternatives Partners
• Global Capital Markets (15+) • Global Alternatives Sourcing
• Global Credit Research (70+) • BlackRock Alternative Advisors (25+)
•
BlackRock Investment Institute (40+) • Private Equity Partners (60+)
• Financial Markets Advisory (150+) • Real Assets (150+) Source: BlackRock, As
of 30 September 2017.
1. AUM is shown on a managed view basis and includes committed capital
4
Benefits of BlackRock Platform to BCIC
BlackRock
Brand and Reputation
Independent, fiduciary client focused thought leader
Deep relationships with borrowers, sponsors, intermediaries and capital providers
Strong risk management culture: 200+ risk professionals independent from the investment team providing top-down and bottom-up oversight
Innovative solutions provider for client investors and borrowers through economic cycles
Position as a top counterparty to the Street affords access to ideas, insights and efficient financing
Differentiated Sourcing
Dedicated US middle market sourcing team
• 15 investment professionals dedicated to managing BCIC; on average 20+ years of experience among senior team members
Well-established multi-channel origination network creates large sourcing funnel
BlackRock’s significant market position and relationships help expand sourcing reach with dealers and banks
17 BlackRock Global Capital Markets professionals dedicated to sourcing
Information Edge
Rigorous due diligence, disciplined credit underwriting and active portfolio monitoring for scalable and consistent performance
Superior technology and infrastructure for portfolio management
Active analysis, management
and oversight of company-specific and overall portfolio risks through BlackRock’s RQA group
75+ credit research analysts provide macro, industry and
single-name insight
Vast external network (industry experts, competitors, customers, vendors, advisors)
5
BCIC – Management Team
• 15 member
investment team with senior investment professionals averaging 20+ years of experience.
• Significant legal, finance, operational and risk management support
Michael Zugay* (17)
Head of US Private Capital & Chief Executive
Officer, BCIC
Chairman of Investment Committee
SENIOR TEAM MEMBERS DEAL TEAM
MEMBERS DEDICATED RESOURCES
Jason Mehring* (23) Scott Booth (17) Charlie Guyton (5) Andrew Norman (3) Finance & Accounting Legal
Managing Director – Chicago Director Associate Associate Mike Pungello (MD, Laurence Paredes Vice Chairman of IC Interim CFO) Managing Director
Joseph Carvalho (9) Nick Holderness (6) James Vena (4) Abby Miller (Dir.) Jennifer O’Neil Marshall Merriman* (31)
Vice President Associate Associate Adam Geisler (VP) Director Managing Director – Virginia
Jacky Li (VP) Justin Lee
Head of Portfolio Management
Suzanne Cutler (12) Anthony Olea (9) Kush Kothary (4) Vice President
Aaron
Kless* (17) Vice President Vice President Associate Business Management
Managing
Director Ollie Radakovic Dedicated legal counsel Director thoroughly review all
Stephen Sachman* (25) investment
Managing Director Product Strategy documentation and
outside counsel
Justine Duffin, CFA enhances review
Nik Singhal
(19) Director process
Managing Director Tyler Herried Vice President
Mariel Jenkins
Associate
RISK MANAGEMENT GLOBAL CREDIT RESEARCH PLATFORM CAPITAL MARKETS GROUP 200+ professionals 75+ professionals 17 professionals
Kaizad Cama, a dedicated risk manager, partners Centralized capital markets presence leverages scale Credit research analysts globally provide fundamental research and with team to
monitor and review risk, performance and breadth of platform to help maximize allocations knowledge across sectors and industries and resources needed to deliver alpha and seeks alpha opportunities in primary markets
Source: BlackRock as of 09/30/17. ( ) Indicates years investment experience. *Investment Committee Member
6
Strategic Priorities
Key tenets of our strategy
Creating a more stable stream of Net Investment Income
• Dampen earnings
volatility
• Focusing on interest earning investments
• Covering
quarterly distributions with cash NII
Increasing the steady state leverage to 0.70 to 0.75x
• Permits a prudent cushion to the regulatory requirement of 1.00x
Rotating out of legacy
equities and redeploying into NII enhancing assets
Income-based incentive fee completely waived from March 7, 2017 to December 31, 2018
• Helps to support the aforementioned objectives
• Long fee waiver period coupled
with low net leverage ratio provides BCIC with significant flexibility in rotating certain legacy investments and disciplined new deployment
The above represents
the Fund’s investment objectives. There is no guarantee that these objectives will be met.
7
Progress on Strategic Priorities – Legacy Portfolio
Restructuring Expertise
Designated a Head of Portfolio Management with 30+ year track record
of credit/legal/restructuring expertise to focus on maximizing value for any underperforming investments
ï½
In-house resources with complex workout/restructuring experience
Rotation of Legacy Portfolio
8 equity investments exited
• Represent ~$192 mm of proceeds, at 2.7% discount to marked
value
Continue to evaluate opportunities to exit the remaining legacy re-org equities
Portfolio Company Restructuring
4 portfolio companies, or ~$144 mm in current FMV restructured
to right size the capital structure and facilitate the execution of business plans
1 underperforming investment with $15 mm in FMV is currently in the
restructuring process
8
Progress on Strategic Priorities – Deployments
Under BlackRock’s management (since March 6, 2015):
Deployment
focused on three core strategies
• Gordon Brothers Finance Company (a leading asset-based lender)
• BCIC Senior Loan Partners (a senior loan focused joint venture)
• Direct senior
and junior capital opportunities
BCIC has deployed approximately $600 million into investments
• 98% of which are interest or dividend generating
• Approximately $135 million
of investments have been realized at par or above
Approximately 50% of the investment portfolio (by FMV) now consists of investments made since the acquisition
• 100% of these investments are performing
9
Deployment Strategy
Three Core Channels of
Opportunity
BCIC Senior Loan Gordon Brothers Direct Senior & Partners, LLC Finance Company Junior Capital Opportunities
• Formed in June 2016; Joint venture • Portfolio company which is an established • Patient and strong underwriting portfolio company with Windward asset-based lender
capabilities enable us to constantly be in Investments LLC; $100 MM member the market especially during times of capital; $200 MM leverage from Citi • Through BCIC’s investments in the market dislocations portfolio company, BCIC gains
exposure
• Through BCIC’s investments in the joint to a diversified pool of primarily asset- • $443 million deployed in interest bearing
venture portfolio company, BCIC gains backed, first lien loans investments from BlackRock’s exposure to a diversified pool of first lien acquisition of the Advisor to September senior secured middle market loans
• BCIC’s largest investment with ~$118 MM 30, 2017
• BCIC investment is $65.7
MM (as of invested (as of September 30, 2017)
September 30, 2017) • Of this, ~$313 MM deployed in junior debt investments
10
Diversified Investment Portfolio
Portfolio by
Issuer6,7
Portfolio by Industry6
Portfolio by Asset Class6
Number of Portfolio Companies
32
Investments at Fair Market Value
$833.9M
Average Investment at Cost
$27.8M
Weighted Average Yield on Income Securities6
10.8%
Floating-Rate Debt Investments
74%
A significant floating-rate portfolio offers protection against rising rates
As of
September 30, 2017. Please see Notes to the Presentation on page 13
Gordon Brothers Finance Company
U.S. Well Services, LLC
BCIC Senior Loan Partners JV
AGY Holding Corp.
Vertellus Specialities Inc.
Wink Holdco, Inc.
First Boston Construction Holdings, LLC
GSE Environmental, Inc.
Pre-Paid Legal Services, Inc.
Sur La Table, Inc.
Other
Finance
Chemicals, Plastics & Rubber
Energy: Oil & Gas
Services: Business
Environmental Industries
Insurance
Retail
Aerospace & Defense
Healthcare & Pharmaceuticals
Services: Consumer
Other
Senior Secured 1st Lien Debt
Senior Secured 2nd Lien Debt
Subordinated / Unsecured Debt
Preferred Equity
Common Equity & Other
11
Debt Summary
Summary of Borrowings
During 2017:
Extended revolver maturity to 2022
Security Available Outstanding Rate Maturity
Issued $144 million 5.00% unsecured
convertible notes due 2022
Reduced cost of debt by repurchasing
•
$60 million of 5.50% unsecured convertible notes due 2018
• $17 million 6.60% secured notes due 2018
• $15 million L+325 term loan due 2019
Sufficient liquidity to redeem the remaining
$55 million of 5.50% convertible notes in Feb 2018
($ in Millions) As of 9/30/17
Credit Facility $440 $56 L + 1.75% - 2.00% 2022 2018
Convertible Notes 55 55 5.50% 2018
2022 Convertible Notes 144 144 5.00% 2022
Total $639 $255
Debt Maturity Profile Comparison of Debt Investments and Borrowings
As of 9/30/17
Borrowings Debt Investments at FMV, Borrowings (pro forma for Feb-18 note maturity)
Percentage of Total Amount Outstanding:
Fixed Rate Securities 26.2% 78.1% 56.4%
Floating Rate Securities 73.8% 21.9% 43.6%
$200 $150 $100 $50 $0 2017 2018 2019 2020 2021 2022
Thereafter
$55 $144 $56
Credit Facility 2018 Convertible Notes 2022
Convertible Notes
BCIC is poised to benefit from rising Libor rates
12
Notes to the Presentation
1. Total investment
portfolio excludes cash and cash equivalents.
2. Balance sheet per share data utilizes total shares outstanding at end of period.
3. Dividend yield as of a date is calculated by annualizing the most recent quarterly dividend announced preceding such date as a percentage of the closing stock price on such
date.
4. Debt less available cash and receivable for investments sold, plus payable for investments purchased, unamortized debt issuance costs and legal settlement
payable, if applicable.
5. Distribution Coverage for any period represents the ratio of net investment income, as adjusted, for that period to distributions
declared during the same period.
6. Based on fair market value.
7. These
investments were selected to depict the top ten holdings of the Company. They are non-representative of all underlying Company investments and it should not be assumed that the Company will invest in
comparable investments, or that any future investments made by the Company will be successful. To the extent that these investments prove to be profitable, it should not be assumed that the Company’s investments will be profitable or will be as
profitable.
13