Delaware

814-00712

20-2725151

(State or other jurisdiction of

(Commission

(IRS Employer

incorporation or organization)

File Number)

Identification Number)

☐

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))

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

BKCC

NASDAQ Global Select Market

ITEM 2.02.

RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

ITEM 7.01.

REGULATION FD DISCLOSURE.

ITEM 9.01.

FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit

Number

Description

99.1

Press Release, dated as of November 3, 2021

BLACKROCK CAPITAL INVESTMENT

CORPORATION

Date: November 3, 2021

By:

/s/ Abby Miller

Name: Abby Miller

Title: Chief Financial Officer and Treasurer

Investor Contact:

Press Contact:

Nik Singhal

Brian Beades

212.810.5427

212.810.5596

•

GAAP Net Investment Income (“GAAP NII”) was $4.9 million, or $0.07 per share, up 1.4% from the second quarter, providing third quarter distribution coverage of 66%, up from 65% in the second quarter.

•

Adjusted Net Investment Income (“Adjusted NII”) was $6.2 million, or $0.08 per share, up 28.1% from the second quarter, providing third quarter distribution coverage of 84%, up from 65% in the second quarter. Adjusted NII excludes the “hypothetical liquidation” basis capital gains incentive fee accrual required under GAAP of $1.3 million in the third quarter and zero in the second quarter (refer to Supplemental Information for further details). GAAP NII and Adjusted NII also benefited from fee and other one-time income of $0.01 per share.

•

Net Asset Value (“NAV”) increased to $350.9 million, up 1.1% from $347.2 million at the end of the second quarter; NAV per share increased 1.3% to $4.74 per share from $4.68 per share, primarily driven by net realized and unrealized gains of $6.7 million during the quarter.

•

Strong gross deployments in senior secured debt of $62.8 million with eight new portfolio companies added during the third quarter, offset by gross repayments/exits of $61.6 million including $19.6 million in cash proceeds from the disposal of SVP equity as previously disclosed on Form 8-K.

•

Net leverage of 0.57x as of September 30, 2021 was up slightly from 0.56x as of June 30, 2021. Total liquidity for portfolio company investments, including cash, was approximately $218 million, subject to leverage and borrowing base restrictions.

•

Under the existing share repurchase program, 133,039 shares were repurchased during the third quarter for approximately $0.5 million at an average price of $4.00 per share, including brokerage commissions.

•

Subsequent to September 30, 2021, junior capital exposure was further reduced after a return of capital distribution of $18.3 million was received from BCIC Senior Loan Partners (“SLP”) primarily with proceeds from SLP’s sale of the Crown Paper first lien loan. The remaining portfolio of SLP consists of first lien loans in two portfolio companies with an estimated FMV of $13.3 million.

Three Months Ended September 30, 2021

$ in Millions

%

Deployments

First Lien Debt

56

88%

Second Lien Debt

7

12%

Repayments/Exits

Non-Core & Junior Capital

20

33%

Other Core Assets

42

67%

Pro Forma³

September 30, 2021

September 30, 2021

December 31, 2020

December 31, 2019

Portfolio Composition

First Lien Debt

70%

68%

50%

34%

Second Lien Debt

21%

20%

27%

23%

Junior Capital¹

9%

12%

23%

43%

Portfolio Company Count

78

78

55

47

Non-Core Assets

Portfolio Company Count²

5

5

6

9

Fair Market Value ("FMV", in Millions)

26

26

42

120

% of investments, at FMV

5%

5%

9%

16%

¹

Includes unsecured/subordinated debt and equity investments.

²

Excludes portfolio companies with zero FMV.

³

Represents portfolio information on a pro forma basis following the return of capital of $18.3 million received from SLP subsequent to September 30, 2021. The pro forma amounts are calculated by reducing SLP FMV by $18.3 million from the portfolio at September 30, 2021.

Q3 2021

Q2 2021

Q3 2020

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

Total Amount

Per Share

Total Amount

Per Share

Total Amount

Per Share

Net Investment Income/(loss)

$4.9

$0.07

$4.8

$0.07

$8.5

$0.12

Net realized and unrealized gains/(losses)

$6.7

$0.09

$27.2

$0.36

$(35.7)

$(0.51)

Basic earnings/(losses)

$11.6

$0.16

$32.0

$0.43

$(27.2)

$(0.39)

Distributions declared

$7.4

$0.10

$7.4

$0.10

$7.0

$0.10

Net Investment Income/(loss), as adjusted¹

$6.2

$0.08

$4.8

$0.07

$8.5

$0.12

Basic earnings/(losses), as adjusted¹

$12.9

$0.17

$32.0

$0.43

$(27.2)

$(0.39)

¹

Non-GAAP basis financial measure, excluding hypothetical liquidation basis capital gain incentive fee accrual under GAAP. See Supplemental Information.

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

September 30, 2021

June 30, 2021

December 31, 2020

September 30, 2020

Total assets

$575.9

$571.7

$511.7

$621.4

Investment portfolio, at fair market value

$558.1

$549.3

$479.0

$609.0

Debt outstanding

$201.4

$193.9

$179.8

$305.0

Total net assets

$350.9

$347.2

$315.0

$306.6

Net asset value per share

$4.74

$4.68

$4.23

$4.24

Net leverage ratio¹

0.57x

0.56x

0.51x

0.98x

¹

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.

•

Reduced Exposure in Non-core Legacy Portfolio:

o

As previously disclosed, the Company exited its equity position in SVP, resulting in proceeds of $19.6 million and newly issued equity of approximately $5.9 million. Refer to the Company’s Current Report on Form 8-K, filed with the SEC on August 5, 2021.

o

As of September 30, 2021, non-core legacy assets comprised approximately $26.0 million, or 5% of our total portfolio at FMV (five portfolio companies, excluding portfolio companies with zero FMV), as compared to 8% at the end of the second quarter of 2021 and 16% at the end of 2019. Out of the remaining 5% non-core legacy assets, approximately 68% were income generating debt investments.

•

Reduced Exposure in Other Junior Capital:

o

Subsequent to the third quarter, the Company received an $18.3 million return of capital from SLP primarily with sales proceeds of Crown Paper, an investment previously held by SLP. At September 30, 2021, SLP held first lien loans in two portfolio companies with an aggregate FMV of $13.3 million, after transacting the sale of debt investments in Crown Paper. BCIC owns 85% of the equity in SLP.

o

Other junior capital (unsecured debt and equity) exposure, excluding non-core assets, in the portfolio stood at 11% by FMV (or 8% on a pro forma basis with further return of capital from SLP described above), down from 21% at December 31, 2020 and 40% at December 31, 2019.

•

Share Repurchase Program: On November 3, 2020, the Company’s Board of Directors authorized the Company to purchase up to a total of 7,500,000 shares, effective until the earlier of November 2, 2021 or such time that all the authorized shares have been repurchased. During the quarter, 133,039 shares were repurchased for $532,288 at an average price of $4.00 per share, including brokerage commissions. As of September 30, 2021, 7,029,955 shares remained authorized for repurchase. Cumulative repurchases since BlackRock entered into the investment management agreement with the Company in early 2015 totaled approximately 8.7 million shares at an average price of $6.39 per share, including brokerage commissions, for a total of $55.7 million. Since the inception of our share repurchase program through September 30, 2021, we have purchased approximately 10.5 million shares at an average price of $6.49 per share, including brokerage commissions, for a total of $68.0 million. Additionally, on November 2, 2021, the Company’s repurchase plan expired with 7,003,428 shares remaining unpurchased and no longer authorized for purchase. On November 2, 2021, the Company’s Board of Directors adopted a new repurchase plan and authorized the Company to purchase up to a total of 8,000,000 shares, effective until the earlier of November 2, 2022 or such time that all of the authorized shares have been repurchased.

•

GAAP NII was $4.9 million, or approximately $0.07 per share, for the three months ended September 30, 2021 (and Adjusted NII was $6.2 million or $0.08 per share). Relative to distributions declared of $0.10 per share, our NII distribution coverage was 66% (and Adjusted NII distribution coverage was 84%) for the quarter, up from 65% from the second quarter. As we continue to re-deploy capital into assets consistent with our core strategy, after successfully reducing our exposure to junior capital and non-core investments during 2020 and in the first nine months of 2021, we expect our earnings power to be accretive in the coming quarters.

•

NAV increased to $350.9 million at September 30, 2021, up 1.1% from $347.2 million at June 30, 2021. NAV per share increased 1.3% or $0.06 per share to $4.74 per share on a quarter-over-quarter basis, primarily driven by net realized and unrealized gains of $6.7 million during the quarter.

•

For the quarter ended September 30, 2021, we incurred management fees of $2.1 million, and incentive fees based on income of $0.1 million. The investment advisor has voluntarily waived the incentive fees based on income of $0.1 million, resulting in no net incentive fees for the period. Since March 2017, the investment advisor has waived $29.8 million of incentive fees on a cumulative basis.

•

GAAP requires that the capital gains incentive fee accrual consider unrealized capital appreciation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized on a “hypothetical liquidation” basis. For the quarter ended September 30, 2021, a capital gains incentive fee of $1.3 million was accrued on that basis (refer to Supplemental Information below for further details). No amounts were due to the investment advisor for the period. There can be no assurance that such unrealized capital appreciation will actually be realized in the future, or that any accrued capital gains incentive fee will become payable under our investment management agreement or the Advisers Act. Amounts ultimately paid under the investment management agreement will be consistent with the formula reflected in the agreement.

Three Months Ended

($’s in millions)

September 30, 2021

June 30, 2021

September 30, 2020

Investment deployments

$62.8

$88.9

$24.8

Investment exits

$61.6

$25.4

$24.6

Number of portfolio company investments at the end of period

78

74

55

Weighted average yield of debt and income producing equity securities, at FMV

8.4%

8.6%

9.8%

% of Portfolio invested in Secured debt, at FMV

88%

85%

61%

% of Portfolio invested in Unsecured debt, at FMV

5%

5%

27%

% of Portfolio invested in Equity, at FMV

7%

10%

12%

Average investment by portfolio company, at amortized cost

$8.2

$8.4

$13.5

•

We deployed $62.8 million during the quarter while exits and repayments totaled $61.6 million, resulting in a $1.2 million net deployment.

▪

Deployments primarily consisted of eight new portfolio companies and thirteen investments/funding into existing portfolio companies, which are outlined as follows:

▪

$7.4 million L + 6.25% first lien term loan to Hanna Andersson, LLC, a direct-to-consumer children’s apparel brand;

▪

$6.7 million L + 6.25% first lien term loan and $0.8 million unfunded revolver to James Perse Enterprises, Inc., a luxury fashion apparel brand;

▪

$5.0 million L + 6.25% first lien term loan to OpenMarket Inc., a developer of a cloud communications platform designed to deliver mobile interactions between businesses and consumers;

▪

$2.8 million L + 6.50% first lien term loan, $0.3 million unfunded revolver and $0.3 million unfunded delayed draw term loan to Cybergrants Holdings, LLC, an enterprise SaaS platform that streamlines the process for employee grants management, employee engagement and volunteerism;

▪

$2.6 million L + 7.25% second lien term loan and $0.4 million unfunded delayed draw term loan to Thermostat Purchaser III, Inc., a provider of aftermarket repair and maintenance solutions for commercial heating, ventilation, and air condition (”HVAC”) equipment;

▪

$1.9 million L + 6.00% first lien delayed draw term loan to Greystone Affordable Housing Initiatives, LLC, a provider of bridge and mezzanine loans secured by multifamily and healthcare properties;

▪

$1.6 million L + 6.75% first lien term loan to Oversight Systems, Inc., a provider of artificial intelligence-based transaction analysis software; and

▪

$1.1 million L + 6.75% second lien term loan to VT TopCo, Inc., a provider of deposition and litigation support solutions.

▪

$5.4 million of incremental funding to Razor Group GmbH, which includes $3.8 million of L + 9.00% first lien delayed draw term loan funding, and a $1.6 million first lien convertible term loan at a fixed rate of 7.00%;

▪

$5.0 million L + 6.75% first lien delayed draw term loan funding to FinancialForce.com, Inc.;

▪

$4.9 million L + 7.00% funding to Thras.io, LLC, including a $2.7 million incremental first lien term loan and $2.2 million funded delayed draw term loan (with $2.7 million unfunded);

▪

$3.4 million of incremental L + 7.25% first lien term loan to Keep Truckin, Inc.;

▪

$2.9 million of incremental L + 7.00% second lien term loan to MetroNet Systems Holdings, LLC;

▪

$2.1 million of incremental L + 7.50% first lien term loan to Whele, LLC;

▪

$2.1 million L + 6.25% first lien delayed draw term loan funding to Peter C. Foy & Associates Insurance Services, LLC;

▪

$1.7 million of incremental L + 9.25% first lien term loan to WorldRemit Group Ltd.;

▪

$1.6 million of incremental L + 7.00% first lien term loan to ESO Solutions, Inc.;

▪

$1.1 million of incremental L + 7.00% first lien term loan/delayed draw term loan funding to Rhode Holdings, Inc.;

▪

$1.1 million of incremental L + 8.00% first lien term loan to Pluralsight, Inc.;

▪

$1.0 million of incremental L + 6.75% first lien term loan/delayed draw term loan funding to Sonny’s Enterprises, LLC; and

▪

$0.8 million of incremental L + 9.00% second lien term loan to Team Services Group, LLC.

o

Sales, exits, and repayments were primarily concentrated in four complete exits in portfolio company investments, and one sale:

▪

$19.6 million of cash proceeds from the sale of SVP equity, a non-core legacy asset;

▪

$13.5 million full repayment of first lien term loan in Sphera Solutions, Inc.;

▪

$10.8 million full repayment of second lien term loan in GlobalTranz Enterprises, LLC;

▪

$7.7 million full repayment of first lien term loan in Paula’s Choice Holdings, Inc.; and

▪

$7.5 million full repayment of first lien term loan in Winshuttle, LLC.

•

During the quarter ended September 30, 2021, there were no new non-accrual investments. As of September 30, 2021, there were three non-accrual investment positions, representing approximately 4.3% and 14.0% of total debt and preferred stock investments, at fair value and cost, respectively, as compared to three non-accrual investment positions of approximately 4.4% and 14.5% of total debt and preferred stock investments at fair value and cost, respectively, at June 30, 2021. The weighted average internal investment rating of the portfolio at FMV at September 30, 2021 improved to 1.33 as compared to 1.37 at June 30, 2021 and 1.90 at December 31, 2020.

•

During the quarter ended September 30, 2021, net realized and unrealized gains were $6.7 million, primarily attributable to appreciation in portfolio valuations during the quarter.

•

At September 30, 2021, we had $12.0 million in cash and cash equivalents and $206.0 million of availability under our credit facility, subject to leverage restrictions, resulting in approximately $218.0 million of availability for portfolio company investments. Committed but unfunded portfolio obligations at September 30, 2021 were $33.4 million (excluding the $4.2 million commitment to SLP, which is completely discretionary). We believe there is sufficient liquidity to meet all of the Company’s obligations and deploy new capital consistent with our strategy.

•

Net leverage, adjusted for available cash, receivables for investments sold, payables for investments purchased and unamortized debt issuance costs, was 0.57x at quarter-end, and our 270% asset coverage ratio provided the Company with additional debt capacity of $206.0 million under its asset coverage requirements, subject to borrowing capacity and borrowing base restrictions. Further, as of September 30, 2021, approximately 86% of our assets were invested in qualifying assets, exceeding the 70% regulatory requirement of a business development company.

•

For the third quarter of 2021, the Company declared a cash dividend of $0.10 per share, payable on January 6, 2022 to stockholders of record at the close of business on December 16, 2021.

September 30, 2021

December 31, 2020

Assets

(Unaudited)

Investments at fair value:

Non-controlled, non-affiliated investments (cost of $494,672,826 and $369,079,320)

$500,450,078

$354,957,936

Non-controlled, affiliated investments (cost of $5,075,822 and $20,927,907)

4,267,127

13,099,313

Controlled investments (cost of $143,128,356 and $216,768,227)

53,392,393

110,968,227

Total investments at fair value (cost of $642,877,004 and $606,775,454)

558,109,598

479,025,476

Cash and cash equivalents

11,992,164

23,332,831

Interest, dividends and fees receivable

3,248,380

2,138,304

Deferred debt issuance costs

1,626,431

1,374,115

Receivable for investments sold

32,939

5,439,507

Prepaid expenses and other assets

930,371

409,357

Total assets

$575,939,883

$511,719,590

Liabilities

Debt (net of deferred issuance costs of $660,964 and $1,360,356)

$201,400,204

$179,798,037

Payable for investments purchased

8,367,467

9,193,917

Distributions payable

7,405,845

—

Interest and debt related payables

2,378,419

502,682

Management fees payable

2,086,219

2,313,447

Income incentive fees payable

—

1,849,597

Accrued capital gains incentive fees

1,291,952

—

Accrued administrative expenses

333,057

389,064

Accrued expenses and other liabilities

1,802,169

2,662,569

Total liabilities

225,065,332

196,709,313

Net assets

Common stock, par value $.001 per share, 200,000,000 common shares authorized, 84,478,251 and 84,478,251 issued and 73,996,620 and 74,466,665 outstanding

84,478

84,478

Paid-in capital in excess of par

858,079,713

858,079,713

Distributable earnings (losses)

(439,289,064)

(476,857,055)

Treasury stock at cost, 10,481,631 and 10,011,586 shares held

(68,000,576)

(66,296,859)

Total net assets

350,874,551

315,010,277

Total liabilities and net assets

$575,939,883

$511,719,590

Net assets per share

$4.74

$4.23

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Investment income

Interest income (excluding PIK):

Non-controlled, non-affiliated investments

$

11,247,240

$

7,543,251

$

28,507,317

$

23,265,815

Non-controlled, affiliated investments

—

114,250

11,867

357,724

Controlled investments

—

5,707,147

718,571

16,609,577

PIK income:

Non-controlled, non-affiliated investments

436,929

1,303,323

2,033,318

3,757,448

Non-controlled, affiliated investments

123,521

118,529

360,535

340,318

Controlled investments

—

—

—

1,053,664

Dividend income:

Non-controlled, affiliated investments

—

—

71,500

—

Controlled investments

483,038

1,496,818

1,531,013

6,970,469

Other income:

Non-controlled, non-affiliated investments

223,598

14,139

410,588

77,393

Non-controlled, affiliated investments

—

1,451

—

4,322

Controlled investments

—

3,186

—

67,526

Total investment income

12,514,326

16,302,094

33,644,709

52,504,256

Operating expenses

Interest and other debt expenses

2,973,408

3,668,242

8,695,681

12,239,957

Management fees

2,086,219

2,481,836

5,661,669

8,486,385

Incentive fees on income

79,383

1,492,248

79,383

5,025,386

Incentive fees on capital gains(1)

1,291,952

—

1,291,952

—

Administrative expenses

333,057

379,650

970,058

1,068,915

Professional fees

301,976

461,851

968,969

1,531,708

Insurance expense

204,197

203,794

605,158

446,637

Director fees

158,125

157,500

464,375

494,750

Investment advisor expenses

87,500

87,500

262,500

262,500

Other operating expenses

167,737

334,586

781,251

1,058,182

Total expenses, before incentive fee waiver

7,683,554

9,267,207

19,780,996

30,614,420

Incentive fee waiver

(79,383

)

(1,492,248

)

(79,383

)

(5,025,386

)

Expenses, net of incentive fee waiver

7,604,171

7,774,959

19,701,613

25,589,034

Net investment income(1)

4,910,155

8,527,135

13,943,096

26,915,222

Realized and Unrealized Gain (Loss):

Net realized gain (loss):

Non-controlled, non-affiliated investments

22,048,077

(18,151

)

21,408,576

(12,329,417

)

Non-controlled, affiliated investments

—

—

(7,989,591

)

(43,774,013

)

Controlled investments

524,445

(59,194,744

)

(10,515,629

)

(59,194,744

)

   Net realized gain (loss)

22,572,522

(59,212,895

)

2,903,356

(115,298,174

)

Net change in unrealized appreciation (depreciation):

Non-controlled, non-affiliated investments

(17,434,641

)

7,840,464

19,898,636

(8,101,976

)

Non-controlled, affiliated investments

31,709

496,668

7,019,899

34,674,826

Controlled investments

1,522,554

15,037,776

16,349,397

(51,752,433

)

Foreign currency translation

—

147,185

(285,360

)

(189,875

)

   Net change in unrealized appreciation (depreciation)

(15,880,378

)

23,522,093

42,982,572

(25,369,458

)

Net realized and unrealized gain (loss)

6,692,144

(35,690,802

)

45,885,928

(140,667,632

)

Net Increase (Decrease) in Net Assets Resulting from Operations

$

11,602,299

$

(27,163,667

)

$

59,829,024

$

(113,752,410

)

Net Investment Income Per Share—basic(1)

$

0.07

$

0.12

$

0.19

$

0.39

Earnings (Loss) Per Share—basic(1)

$

0.16

$

(0.39

)

$

0.81

$

(1.65

)

Weighted Average Shares Outstanding—basic

74,081,693

70,086,236

74,221,550

68,943,459

Net Investment Income Per Share—diluted(1)

$

0.07

$

0.12

$

0.19

$

0.39

Earnings (Loss) Per Share—diluted(1)

$

0.15

$

(0.39

)

$

0.73

$

(1.65

)

Weighted Average Shares Outstanding—diluted

91,075,430

87,079,973

91,215,287

85,937,196

⁽¹⁾

Net investment income and per share amounts displayed above are net of the accrual for incentive fees on capital gains which is reflected on a hypothetical liquidation basis in accordance with GAAP for the three and nine month periods ended September 30, 2021. Refer to Supplemental Information section below for further details and as adjusted figures that reflect that there were no incentive fees on capital gains realized and payable to the Advisor during such periods.

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

GAAP Basis:

Net Investment Income

$4,910,155

$8,527,135

$13,943,096

$26,915,222

Net Investment Income per share

0.07

0.12

0.19

0.39

Addback: GAAP incentive fee based on capital gains

1,291,952

—

1,291,952

—

Addback: GAAP incentive fee based on Income net of incentive fee waiver

—

—

—

—

Pre-Incentive Fee¹:

Net Investment Income

$6,202,107

$8,527,135

$15,235,048

$26,915,222

Net Investment Income per share

0.08

0.12

0.21

0.39

Less: Incremental incentive fee based on Income net of incentive fee waiver

—

—

—

—

As Adjusted²:

Net Investment Income

$6,202,107

$8,527,135

$15,235,048

$26,915,222

Net Investment Income per share

0.08

0.12

0.21

0.39

¹

Pre-Incentive Fee: Amounts are adjusted to remove all incentive fees. Such fees have been accrued but are not due and payable at the reporting date.

²

As Adjusted: Amounts are adjusted to remove the GAAP accrual for incentive fee based on capital gains, and to include only the incremental incentive fee based on income. Adjusted amounts reflect the fact that no Incentive Fee on capital gains was realized and payable to the Advisor during the three and nine months periods ended September 30, 2021 and 2020, respectively. Under the Company’s investment management agreement, incentive fee based on income is 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.