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):  July 31, 2019

 

BLACKROCK CAPITAL INVESTMENT CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

40 East 52^nd Street

New York, NY 10022

(Address of principal executive offices)

(212) 810-5800

(Registrant’s telephone number, including area code)

Not Applicable

(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:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company 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.   ☐

 

 

 

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On July 31, 2019, BlackRock Capital Investment Corporation (the “Registrant”) issued a press release announcing its financial results for the quarter ended June 30, 2019.  The text of the press release is included as Exhibit 99.1 to this Form 8-K.

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

The Registrant issued a press release, filed herewith as Exhibit 99.1, and by this reference incorporated herein, on July 31, 2019 announcing the declaration of a quarterly distribution of $0.14 per share.  The distribution is payable on October 7, 2019 to stockholders of record as of September 16, 2019.

The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

(d) Exhibits.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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.

 

 

 

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Exhibit 99.1

 

 

 

 

BlackRock Capital Investment Corporation Reports Financial Results for the Quarter Ended June 30, 2019, Declares Third Quarter Distribution of $0.14 per Share

New York, July 31, 2019 – 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 October 7, 2019 to stockholders of record at the close of business on September 16, 2019.

“The strength of our expanded origination and underwriting platform evidenced itself in the second quarter, with gross and net deployments of $106 million and $60 million, respectively. We added twelve new portfolio companies and made add-on investments in five 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 enable us to provide holistic financing solutions to our borrowers. Additionally, our ability to co-invest with affiliated funds facilitates the deployment of capital in a granular fashion, thereby reducing portfolio risk by increasing issuer and sector diversity. Our deployment activity during the quarter drove net leverage to 0.53x compared to 0.37x previous quarter, moving us closer towards our target deployment levels. For the third quarter, we anticipate deployments to remain robust based on our current pipeline and completed investments thus far,” commented James E. Keenan, Chairman and Interim CEO of the Company.

“Our net unrealized and realized losses of $21.8 million (or $0.31 per share) were primarily concentrated in certain equity or equity-like non-core legacy investments. Our investment in the equity of US Well Services, Inc. (“USWS”) alone resulted in $12.5 million of unrealized loss (or $0.18 per share), driven by the decline in its 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. During the quarter, we reduced risk in our legacy investment in Sur La Table by decreasing our exposure in that investment from $30 million to $21 million, while improving the credit profile. Our legacy non-core portfolio was 28% of the total portfolio by fair market value at the end of second quarter, down from 33% at prior quarter. We continue to focus on orderly and advantageous exits or reductions of these non-core legacy positions which have been a source of NAV volatility.

“The decision to reset the distribution level has been driven by the necessity to align the distribution with the current earnings power of the Company. Over the past years, the underperformance of certain legacy investments has weighed on the earnings capability of the Company. We believe that this distribution level will provide our shareholders with more stable and consistent returns. We are committed to creating long-term shareholder value by (i) progressing towards the exit of certain non-core assets on a prudent basis, (ii) redeploying into a more diverse portfolio with a greater mix of 1^st lien assets and (iii) increasing our target leverage ratio while reducing downside risk. We believe that this will enable us to generate better returns on equity and bring the earnings power of the company in line with the sector.

 

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“Under BlackRock’s management of BCIC, from March 6, 2015 to June 30, 2019, we have deployed capital of approximately $1.1 billion, of which $411 million has been exited with a realized IRR of 14.1%. With liquidity at approximately $260 million and no debt maturities until 2022, we have significant operating flexibility and deployment capacity.”

Financial Highlights

 

 

Business Updates

 

 

 

 

 

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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.

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Portfolio and Investment Activity*

 

 

*Balance sheet amounts above are as of period end

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Second Quarter Financial Updates

Liquidity and Capital Resources

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Conference Call

BlackRock Capital Investment Corporation will host a webcast/teleconference at 10:00 a.m. (Eastern Time) on Thursday, August 1, 2019, to discuss its second quarter 2019 financial results. All interested parties are welcome to participate. You can access the teleconference by dialing, from the United States, (888) 204-4368, or from outside the United States, +1-720-543-0214, 10 minutes before 10:00 a.m. and referencing the BlackRock Capital Investment Corporation Conference Call (ID Number 9551103). 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 1, 2019 and ending at 1:00 p.m. on Thursday, August 15, 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 9551103.

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.  

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BlackRock Capital Investment Corporation

Consolidated Statements of Assets and Liabilities

 

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BlackRock Capital Investment Corporation

Consolidated Statements of Operations

 

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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.

 

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, which was extended to June 30, 2019. 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, 2018, on file with the Securities and Exchange Commission ("SEC").

 

Computations for the periods below are derived from the Company's financial statements as follows:

 

 

Note:  The NII amounts for the three and six months ended June 30, 2019 are net of incentive management fees based on income and a corresponding incentive management fee waiver in the amounts of $2,245,935 and $4,526,771, respectively. Additionally, please note that the NII 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

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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, 2018, 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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