Delaware

814-00712

20-2725151

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ITEM 7.01.

REGULATION FD DISCLOSURE.

ITEM 9.01.

FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit

Number

Description

99.1

Press Release, dated as of May 2, 2018

BLACKROCK CAPITAL INVESTMENT CORPORATION

Date:  May 2, 2018

By:

/s/ Michael Pungello

Name:

Michael Pungello

Title:

Interim Chief Financial Officer and Interim Treasurer

Investor Contact:

Press Contact:

Nik Singhal

Brian Beades

212.810.5427

212.810.5596

•

GAAP Net Investment Income (NII) of $0.16 per share providing first quarter distribution coverage of approximately 88%  

•

Net Asset Value (NAV) per share declined 2.3% or $0.18 per share to $7.65 per share on a quarter-over-quarter basis primarily due to net realized depreciation on legacy assets

•

No investments on non-accrual status as of March 31, 2018, a decrease from 15.5% of our debt investments at amortized cost, or 4.0% at fair market value, at December 31, 2017

•

Net leverage of 0.56x was up, reflecting an increase in investment deployment. Total liquidity for portfolio company investments was approximately $228 million, subject to leverage and borrowing base restrictions

•

Under our existing share repurchase program, we repurchased 799,803 shares of common stock via open market purchases in the first quarter

Q1 2018

Q4 2017

Q1 2017

Total

Per

Total

Per

Total

Per

($'s in millions, except per share data)

Amount

Share

Amount

Share

Amount

Share

Net Investment Income

  $           11.6

  $            0.16

  $          14.5

  $           0.20

  $          14.6

  $          0.20

Net realized and unrealized gains/(losses)

  $         (12.5)

  $           (0.17)

  $        (16.4)

  $         (0.22)

  $          (0.3)

  $        (0.00)

Deferred taxes

                 —

                 —

  $            5.3

  $           0.07

                 —

                —

Basic earnings/(loss)

  $           (0.9)

  $           (0.01)

  $            3.3

  $           0.05

  $          14.3

  $          0.20

Distributions declared

  $           13.2

  $              0.18

  $          13.2

  $           0.18

  $          13.1

  $          0.18

Net Investment Income/(loss), as adjusted¹

  $           11.6

  $              0.16

  $          14.5

  $           0.20

  $          14.6

  $          0.20

Basic earnings/(loss), as adjusted¹

  $           (0.9)

  $           (0.01)

  $            3.3

  $           0.05

  $          14.3

  $          0.20

March 31,

December 31,

March 31,

($'s in millions, except per share data)

2018

2017

2017

Total assets

  $                887.1

  $                799.9

  $                990.9

Investment portfolio, at fair market value

  $                870.1

  $                757.9

  $                938.8

Debt outstanding

  $                310.1

  $                206.7

  $                370.9

Total net assets

  $                553.1

  $                571.1

  $                598.4

Net asset value per share

  $                  7.65

  $                  7.83

  $                  8.22

Net leverage ratio²

                     0.56x

                     0.32x

                     0.56x

•

Under our existing share repurchase program, during the first quarter of 2018, 799,803 shares were repurchased for $4.8 million at an average price of $5.98 per share, including brokerage commissions. The cumulative repurchases since BlackRock entered into the investment management agreement with the Company totaled approximately 3.8 million shares for $30.2 million, representing 71.1% of total share repurchase activity, on a dollar basis.  Since the inception of our share repurchase program through March 31, 2018, we have purchased 5.6 million shares at an average price of $7.62 per share, including brokerage commissions, for a total of $42.5 million. In May 2017, our Board of Directors approved an increase to the remaining amount of shares authorized to be repurchased to a total of 2.5 million shares effective July 1, 2017, and an extension to the plan until the earlier of June 30, 2018 or such time that all of the authorized shares have been repurchased. As of March 31, 2018, the total number of remaining shares authorized for repurchase was 1,475,308. Any amount of shares authorized for repurchase by the Board of Directors in May 2017 that remains unpurchased after June 30, 2018 will no longer be authorized for repurchase. In April 2018, our Board of Directors authorized a total of 2.5 million shares for repurchase, effective July 1, 2018 until the earlier of June 30, 2019 or until such time that all of the authorized shares have been repurchased.

•

On February 15, 2018, the Company repaid the remaining $55.0 million in aggregate principal amount of its 5.50% unsecured convertible senior notes due 2018 upon maturity at par using borrowings under the credit facility and cash on hand.

•

On March 15, 2018, the Company entered into a Third Amendment to the Second Amended and Restated Senior Secured Revolving Credit Facility which (i) permanently reduces the aggregate amount of multicurrency commitments under the Credit Facility from $440,000,000 to $400,000,000 and (ii) reduces the amount of shareholders’ equity required under the Credit Facility from $500,000,000 plus any proceeds from the sale of equity interests to $450,000,000 plus any proceeds from the sale of equity interests.

•

On April 16, 2018, the Company increased its equity commitment in Senior Loan Partners from $85.0 million to $113.3 million. Concurrently, Windward Investments LLC, our joint venture partner, increased their equity commitment in a pro rata manner from $15.0 million to $20.0 million.

¹

Non-GAAP basis financial measure. See Supplemental Information on page 7.

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.

($’s in millions)

Three months

Three months

Three months

ended

ended

ended

March 31, 2018

December 31, 2017

March 31, 2017

Investment deployments

$

144.6  

$

63.3  

$

122.3  

Investment exits

$

17.2  

$

124.3  

$

114.4  

Number of portfolio company investments at the end of period

31  

30  

35  

Weighted average yield of debt and income producing equity securities, at fair market value

11.3%  

10.8%  

11.1%  

% of Portfolio invested in Secured debt, at fair market value

59%  

56%  

67%  

% of Portfolio invested in Unsecured debt, at fair market value

16%  

17%  

17%  

% of Portfolio invested in Equity, at fair market value

25%  

27%  

16%  

Average investment by portfolio company, at amortized cost (excluding investments below $5.0 million)

$

33.6  

$

33.0  

$

33.6  

•

We deployed $144.6 million during the quarter while exits of investments totaled $17.2 million, resulting in a $127.4 million net increase in our portfolio due to investment activity.  

▪

Our deployments were primarily concentrated in two new portfolio company investments, and incremental investments in six existing portfolio companies:

▪

$72.7 million funded L+9.38% first lien, last out, term loan to St. George Warehousing & Trucking Co. of California, Inc., which is the largest provider of outsourced container freight station in North America (this position was reduced to $40 million in April 2018 via a partial sale to third parties);

▪

$25.0 million funded L+7.50% second lien term loan to Zest Acquisition Corp., which is the leading designer, manufacturer, and marketer of denture attachment systems;

▪

$19.2 million of incremental L+11.00% unsecured debt as well as $10.5 million preferred stock to Gordon Brothers Finance Company to fund portfolio growth;

▪

$4.2 million of incremental 12.00% unsubordinated debt and $1.0 million equity investment in First Boston Construction Holdings, LLC;

▪

$4.0 million L+6.25% first lien delayed draw term loan to VetCor Professional Practices, LLC;

▪

$2.4 million of incremental equity to Senior Loan Partners;

▪

$2.2 million of incremental 12.00% unsecured debt to CB-HDT Holdings, Inc.; and

▪

$1.7 million L+8.00% second lien delayed draw term loan to Pathway Partners Vet Management Company, LLC

▪

Our repayments were primarily driven by $14.1 million escrow release in connection with the previously disclosed recapitalization of MBS Group Holdings.

•

Our $74.8 million equity investment in Senior Loan Partners is now generating a yield of approximately 11%. Senior Loan Partners made investments into four new portfolio companies and three existing portfolio companies totaling $49.8 million of new capital deployments during the quarter, bringing committed and outstanding amounts, at par, to $266.8 million and $258.1 million, respectively, and a total of 23 borrowers.  The four new investments, at par, were (i) a $15.0 million first lien term loan to Digital Room, LLC, a leading e-commerce marketing business, (ii) a $10.0 million first lien term loan to Community Care Health Network, LLC, a leading provider of health risk assessments, (iii) a $9.5 million first lien term loan to Zenith Home Corp., a leading designer, manufacturer and marketer for bath accessories and other home products, and (iv) a $9.4 million first lien term loan to Protective Industrial Products, Inc., a leading importer, marketer, designer and manufacturer of hand protection and adjacent personal protection equipment.

•

As of March 31, 2018, there were no non-accrual investment positions, as compared to non-accrual investment positions of 4.0% of our total debt investments at fair market value, and 15.5% at amortized cost, at December 31, 2017.  Our average internal investment rating at fair market value at March 31, 2018 was 1.24 as compared to 1.35 at December 31, 2017.

•

During the quarter ended March 31, 2018, net realized loss was $76.6 million, as a result of restructurings or write offs of our debt investment in MBS Group Holdings, Inc. and SVP Worldwide Ltd.; net unrealized depreciation decreased $64.1 million, primarily due to the reversal of previously recognized depreciation of $76.3 million after the restructurings or write off mentioned above, offset partially by $12.2 million net decrease in valuation of certain portfolio companies.  

•

GAAP net investment income (“NII”) was $11.6 million, or $0.16 per share, for the three months ended March 31, 2018. Relative to distributions declared of $0.18 per share, our NII distribution coverage was 88% for the quarter.

•

As previously disclosed, our base management fee rate was reduced from an annual rate of 2.00% of total assets to 1.75% effective March 7, 2017. For the quarter ended March 31, 2018, $1.7 million of incentive management fees based on income was earned by our investment adviser; however, as previously disclosed, any such fees earned until December 31, 2018 have been waived by our investment adviser. Pursuant to the waiver, $9.7 million of incentive management fees have been waived on a cumulative basis. During the quarter, there was no accrual for incentive management fees based on gains.

•

Tax characteristics of all 2017 distributions were reported to stockholders on Form 1099 after the end of the calendar year. Our 2017 tax distributions of $0.72 per share were comprised of ordinary income. Our return of capital distributions since inception totaled $1.96 per share. At our discretion, we may carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. We will accrue excise tax on estimated undistributed taxable income as required. There was no undistributed taxable income carried forward from 2017. For more information on our GAAP distributions, please refer to any Section 19 Notices that may be posted within the Distribution History section of our website, as necessary.

•

At March 31, 2018, we had $1.6 million in cash and cash equivalents and $226 million of availability under our credit facility based upon our March 31, 2018 borrowing base calculation, subject to leverage restrictions, resulting in approximately $227.6 million of availability for portfolio company investments.

•

Net leverage, adjusted for available cash, receivables for investments sold and unamortized debt issuance costs, was 0.56x at quarter-end, and our 273% asset coverage ratio provided the Company with available debt capacity under its asset coverage requirements of $232.3 million which exceeds the undrawn amount of $226 million under our credit facility. Further, as of quarter-end, 85% of our portfolio was invested in qualifying assets, exceeding the 70% regulatory requirement of a business development company.

March 31,

2018

December 31,

2017

Assets

Investments at fair value:

Non-controlled, non-affiliated investments (cost of $361,376,464 and $311,938,762)

$   354,811,421

$   261,683,202

Non-controlled, affiliated investments (cost of $140,588,866 and $195,354,637)

157,956,644

215,779,077

Controlled investments (cost of $375,176,398 and $321,999,526)

357,291,181

280,478,528

Total investments at fair value (cost of $877,141,728 and $829,292,925)

870,059,246

757,940,807

Cash and cash equivalents

1,569,618

29,014,645

Receivable for investments sold

4,186,125

1,344,918

Interest, dividends and fees receivable

8,378,337

8,342,780

Prepaid expenses and other assets

2,940,895

3,236,819

Total Assets

$   887,134,221

$   799,879,969

Liabilities

Debt (net of deferred financing costs of $3,932,481 and $4,209,445)

$   310,092,968

$   206,661,272

Interest and credit facility fees payable

2,822,292

1,820,971

Distributions payable

13,150,684

13,152,924

Base management fees payable

3,312,369

3,734,655

Payable for investments purchased

754,153

479,297

Accrued administrative services

553,764

114,995

Other accrued expenses and payables

3,383,066

2,815,923

Total Liabilities

334,069,296

228,780,037

Net Assets

Common stock, par value $.001 per share, 200,000,000 common shares authorized, 77,861,287 and 77,723,764 issued and 72,284,630 and 72,946,910 outstanding

77,861

77,723

Paid-in capital in excess of par

858,904,233

858,087,822

Undistributed / (Distributions in excess of) net investment income

(15,446,576)

(13,918,838)

Accumulated net realized loss on investments and extinguishment of debt

(239,358,178)

(162,723,790)

Net unrealized (depreciation), net of tax

(8,592,758)

(72,688,483)

Treasury stock at cost, 5,576,657 and 4,776,854 shares held

(42,519,657)

(37,734,502)

Total Net Assets

553,064,925

571,099,932

Total Liabilities and Net Assets

$    887,134,221

$    799,879,969

Net Asset Value Per Share

$                 7.65

$                 7.83

Three months

Three months

ended

ended

March 31, 2018

March 31, 2017

Investment Income:

Non-controlled, non-affiliated investments:

Cash interest income

$          7,144,027

$        11,284,329

PIK interest income

                       —  

           1,477,388

Cash dividend income

                        —  

              404,781

PIK dividend income

                      —  

                65,943

Fee income

              465,206

              298,897

Total investment income from non-controlled, non-affiliated investments

             7,609,233

           13,531,338

Non-controlled, affiliated investments:

Cash interest income

          2,214,613

           2,464,836

PIK interest income

              690,960

           1,196,845

PIK dividend income

              189,026

              189,026

Fee income

                35,000

              286,295

Total investment income from non-controlled, affiliated investments

             3,129,599

             4,137,002

Controlled investments:

Cash interest income

           5,085,705

           5,703,987

PIK interest income

              766,466

              132,481

Cash dividend income

           3,126,861

           1,397,351

PIK dividend income

              731,516

                      —

Fee income

              387,058

                25,000

Total investment income from controlled investments

           10,097,606

             7,258,819

Total investment income

           20,836,438

           24,927,159

Expenses:

Base management fees

             3,312,369

             4,523,857

Incentive management fees

  1,735,195

  809,183

Interest and credit facility fees

             3,708,958

             3,987,080

Professional fees

                733,164

                565,110

Administrative services

                553,764

                327,677

Director fees

                187,000

                172,500

Investment advisor expenses

                  87,500

                  87,500

Other

                630,737

                698,135

Total expenses, before incentive management fee waiver

           10,948,687

           11,171,042

Incentive management fee waiver

           (1,735,195)

              (809,183)

Expenses, net of incentive management fee waiver

             9,213,492

             10,361,859

Net Investment Income

           11,622,946

           14,565,300

Realized and Unrealized Gain (Loss):

Net realized gain (loss):

Non-controlled, non-affiliated investments

           (50,515,956)

         (53,991,961)

Controlled investments

         (26,118,432)

             2,375,535

Net realized gain (loss)

         (76,634,388)

         (51,616,426)

Net change in unrealized appreciation (depreciation) on:

Non-controlled, non-affiliated investments

           43,690,517

           56,701,095

Non-controlled, affiliated investments

             1,422,575

           (2,688,594)

Controlled investments

           19,156,544

           (2,704,387)

Foreign currency translation

              (173,911)

                  73,295

Net change in unrealized appreciation (depreciation)

           64,095,725

           51,381,409

Net realized and unrealized gain (loss)

         (12,538,663)

              (235,017)

Net Increase (Decrease) in Net Assets Resulting from Operations

$           (915,717)

$        14,330,283

Net Investment Income Per Share—basic

$                   0.16

$                   0.20

Earnings (Loss) Per Share—basic

$                 (0.01)

$                   0.20

Average Shares Outstanding—basic

  72,991,828

  72,804,629

Net Investment Income Per Share—diluted

$                   0.15

$                   0.20

Earnings (Loss) Per Share—diluted

$                 (0.01)

$                   0.20

Average Shares Outstanding—diluted (Net Investment Income only for March 31, 2018)

           89,985,565

           82,701,357

Distributions Declared Per Share

$                   0.18

$                   0.18

Three months

ended
March 31, 2018

Three months

ended
March 31, 2017

GAAP Basis:

Net Investment Income

$        11,622,946  

$         14,565,300  

Net Investment Income per share

0.16  

0.20  

   Addback:  GAAP incentive management fee expense based on Gains

—  

—  

   Addback:  GAAP incentive management fee expense based on Income

               —  

               —  

Pre-Incentive Fee¹:

Net Investment Income

$        11,622,946  

$         14,565,300  

Net Investment Income per share

0.16  

0.20  

Less: Incremental incentive management fee expense based on Income

—  

—  

As Adjusted²:

Net Investment Income

$        11,622,946  

$         14,565,300  

Net Investment Income per share

0.16  

0.20