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 August 3, 2022

BLACKROCK CAPITAL INVESTMENT

CORPORATION

Date: August 3, 2022

By:

/s/ Chip Holladay

Name: Chip Holladay

Title: Interim 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 $7.1 million, or $0.10 per share, up 10% from the prior quarter, providing second quarter distribution coverage of 97%, up from 88% in the prior quarter.

•

Adjusted Net Investment Income¹ (“Adjusted NII”) was $6.0 million, or $0.08 per share, providing second quarter adjusted distribution coverage of 82%, consistent with the prior quarter.

•

Net Asset Value (“NAV”) decreased to $335.4 million, down 3.3% from $346.9 million as of March 31, 2022; NAV per share decreased by 2.8% to $4.57 per share from $4.70 per share as of March 31, 2022, primarily driven by net unrealized losses of $(9.7) million during the quarter resulting from spread widening and general market declines.

•

The Company had strong gross deployments totaling $73.5 million during the second quarter, substantially all of which were investments in senior secured debt. During the second quarter, 11 new portfolio companies were added, bringing total portfolio companies at quarter-end to 100, up from 86 at the end of 2021 and 55 at the end of 2020. Gross repayments during the second quarter were $25.1 million.

•

The Company’s weighted-average portfolio yield as of June 30, 2022 increased to 9.1% based on total portfolio fair value, up from 8.4% as of March 31, 2022. The increase was largely driven by a rise in LIBOR and SOFR rates as well as slightly wider spreads on new originations during the quarter.

•

Net leverage was 0.64x as of June 30, 2022, and was up from 0.46x as of March 31, 2022, primarily driven by net investment deployments during the second quarter and a higher average debt balance quarter over quarter. Total available liquidity for deployment into portfolio company investments, including cash, was approximately $141 million, subject to leverage and borrowing base restrictions.

•

Under the existing share repurchase program, 420,083 shares were repurchased during the second quarter for approximately $1.6 million at an average price of $3.78 per share, including brokerage commissions.

•

As previously announced, the Company issued $92.0 million in aggregate principal amount of senior unsecured notes (the “Notes”) in two tranches to qualified institutional investors in a private placement on June 9, 2022. The Company used the Notes proceeds as well as availability under the revolver to repay the Company’s $143.7 million of outstanding 5.00% unsecured convertible notes (the “2022 Convertible Notes”) on their June 15, 2022 maturity date.

June 30, 2022

December 31, 2021

December 31, 2020

December 31, 2019

Portfolio Composition

First Lien Debt

74%

74%

50%

34%

Second Lien Debt

20%

19%

27%

23%

Junior Capital¹

6%

7%

23%

43%

Portfolio Company Count

100

86

55

47

Non-Core Assets

Portfolio Company Count²

4

5

6

9

Fair Market Value ("FMV", in Millions)

23

26

42

120

% of investments, at FMV

4%

5%

9%

16%

¹

Includes unsecured/subordinated debt and equity investments.

²

Excludes portfolio companies with zero FMV.

Q2 2022

Q1 2022

Q2 2021

($'s in millions, except per share data)²

Total Amount

Per Share

Total Amount

Per Share

Total Amount

Per Share

Net Investment Income/(loss)

$7.1

$0.10

$6.5

$0.09

$4.8

$0.07

Net realized and unrealized gains/(losses)

$(9.7)

$(0.13)

$(1.0)

$(0.01)

$27.2

$0.36

Basic earnings/(losses)

$(2.5)

$(0.03)

$5.5

$0.07

$32.0

$0.43

Distributions declared

$7.4

$0.10

$7.4

$0.10

$7.4

$0.10

Net Investment Income/(loss), as adjusted¹

$6.0

$0.08

$6.0

$0.08

$4.8

$0.07

Basic earnings/(losses), as adjusted¹

$(3.6)

$(0.05)

$5.1

$0.07

$32.0

$0.43

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

June 30, 2022

March 31, 2022

December 31, 2021

June 30, 2021

Total assets

$585.3

$533.3

$572.0

$571.7

Investment portfolio, at FMV

$557.4

$517.8

$552.6

$549.3

Debt outstanding

$237.0

$171.6

$196.9

$193.9

Total net assets

$335.4

$346.9

$349.7

$347.2

Net asset value per share

$4.57

$4.70

$4.73

$4.68

Net leverage ratio¹

0.64x

0.46x

0.56x

0.56x

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.

•

Issuance of Senior Unsecured Debt: As previously disclosed, on April 21, 2022, the Company entered into a Note Purchase Agreement governing the issuance on June 9, 2022, of $92.0 million in aggregate principal amount of Notes in two tranches to qualified institutional investors in a private placement. The Company issued $35.0 million in aggregate principal amount of Notes with a fixed interest rate of 5.82%, and $57.0 million in aggregate principal amount of Notes bearing interest at a rate equal to SOFR plus 3.14%. The Notes have a maturity date of December 9, 2025. The Company may prepay the Notes at its option, subject to a prepayment premium, in an amount equal to 2% during the first year, 1% during the second year, 0.5% during the third year and none thereafter. In addition, the Company will be obligated to offer to repay the Notes at par if certain change in control events occur. The Notes are general unsecured obligations of the Company that rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company. The Company has entered into an interest rate swap agreement with a notional value of $35.0 million for the first three years of the Notes’ term, pursuant to which the Company will pay a floating rate of interest equal to SOFR and will receive a fixed rate of interest equal to 2.633%. For more information, please refer to the Form 8-K as filed with the Securities and Exchange Commission (the “SEC”) on April 22, 2022.

•

Repayment of 2022 Convertible Notes: On June 15, 2022, the Company’s 2022 Convertible Notes matured and the Company fully repaid the aggregate outstanding $143.7 million principal amount (post noteholder conversion) plus outstanding accrued interest. During the quarter, $30,000 of principal was converted to the Company’s common stock at the noteholders’ option pursuant to the terms of the 2022 Convertible Notes indenture.

•

Other Junior Capital Exposure: As of June 30, 2022, the Company’s other junior capital (including unsecured/subordinated debt and equity) exposure, excluding non-core assets, remained low at 5% of the portfolio, down from 6% at December 31, 2021, 21% at December 31, 2020, and 40% at December 31, 2019. During the second quarter, the Company received a partial repayment of $4.2 million on the unsecured debt of Gordon Brothers Finance Company (“GBFC”), a non-accrual investment.

•

Share Repurchase Program: On November 2, 2021, the Company’s Board of Directors 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 the authorized shares have been repurchased. During the second quarter, 420,083 shares were repurchased for $1,586,451 at an average price of $3.78 per share, including brokerage commissions. As of June 30, 2022, 7,380,503 shares remained authorized for repurchase.

•

GAAP NII was $7.1 million, or approximately $0.10 per share, for the three months ended June 30, 2022 (and Adjusted NII was $6.0 million or $0.08 per share). Relative to distributions declared of $0.10 per share, GAAP NII distribution coverage was 97%, up from 88% from the prior quarter. Adjusted NII distribution coverage was 82% for the second quarter, which is consistent with the prior quarter.

•

NAV decreased to $335.4 million at June 30, 2022, down 3.3% from $346.9 million at March 31, 2022; NAV per share decreased 2.8% to $4.57 per share from the prior quarter, primarily driven by net unrealized losses of $(9.7) million on the portfolio.

•

For the quarter ended June 30, 2022, we incurred management fees of $1.9 million, and incentive fees based on income of $0.1 million. The payment of the $0.1 million incentive fees based on income was deferred pursuant to our investment management agreement.

•

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. Additionally, if the resulting calculation amount is negative or, if at the end of the annual measurement period (or every June 30) unrealized capital appreciation has not been realized, the accrual for GAAP may result in the reduction or reversal of incentive fees on capital gains previously accrued. For the

quarter ended June 30, 2022, a capital gains incentive fees reduction of $(1.1) million was recorded on that basis (refer to Supplemental Information below for further details) and at June 30, 2022, the balance of accrued incentive fees on capital gains was zero. There can be no assurance that such unrealized capital appreciation will actually be realized during each annual measurement period, or that any accrued capital gains incentive fee will become payable under our investment management agreement or the Investment Advisers Act of 1940. Amounts ultimately paid under the investment management agreement will be consistent with the formula reflected in the agreement.

Three Months Ended

($’s in millions)

June 30, 2022

March 31, 2022

June 30, 2021

Investment deployments

$73.5

$44.0

$88.9

Investment exits

$25.1

$78.7

$25.4

Number of portfolio company investments at the end of period

100

93

74

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

9.3%

8.5%

8.6%

% of Portfolio invested in Secured debt, at FMV

94%

92%

85%

% of Portfolio invested in Unsecured/subordinated debt, at FMV

4%

5%

5%

% of Portfolio invested in Equity, at FMV

2%

3%

10%

Average investment by portfolio company, at amortized cost

$6.3

$6.3

$8.4

•

We deployed $73.5 million during the quarter while exits and repayments totaled $25.1 million, resulting in a $48.4 million net increase in our portfolio.

▪

Deployments consisted of eleven new portfolio companies and six investments/fundings into existing portfolio companies, which are outlined as follows:

▪

$11.4 million SOFR (“S”) + 7.50% first lien term loan to InMoment, Inc., a provider of customer experience management software and analytical solutions;

▪

$7.4 million S + 5.75% first lien term loan, $0.5 million unfunded delayed draw term loan, and $0.5 million unfunded revolver to Kaseya Inc., a provider of cloud-based IT management solutions;

▪

$5.5 million S + 6.00% first lien term loan, and $0.6 million unfunded revolver to SEP Eiger Bidco Ltd. (Beqom), a global provider of compensation management software;

▪

$5.2 million S + 6.25% first lien term loan and $0.4 million unfunded revolver to OCM Luxembourg Baccarat Bidco S.A.R.L. (Interblock), a developer, supplier and lessor of electronic table game products;

▪

$5.0 million S + 7.75% second lien term loan to DTI Holdco, Inc. (Epiq Systems, Inc.), a global technology enabled legal service provider, offering solutions to corporate and law firm clients;

▪

$3.8 million S + 6.00% first lien term loan and $1.5 million unfunded delayed draw term loan to PHC Buyer, LLC (Patriot Home Care), a provider of home personal care services;

▪

$3.3 million S + 6.00% first lien term loan, $0.2 million funded revolver (with an additional $0.3 million unfunded portion), and $1.1 million unfunded delayed draw term loan to CSG Buyer, Inc. (Core States), a provider of architectural, design, engineering, specialty program management services and signage solutions;

▪

$2.6 million S + 6.50% first lien term loan to Peloton Interactive, Inc., a provider of connected fitness products and subscription-based streaming of instructor-led fitness classes;

▪

$1.5 million S + 7.25% first lien term loan and $1.5 million unfunded delayed draw term loan to Grey Orange Incorporated, a provider of warehouse management and order fulfillment solutions;

▪

$0.9 million S + 6.00% first lien term loan and $2.1 million unfunded delayed draw term loan to Peter C. Foy & Associates Insurance Services, LLC (PCF Insurance), a national retail property and casualty insurance broker; and

▪

$0.1 million funded revolver (with an additional $0.3 million unfunded portion) and $7.3 million S + 6.00% unfunded first lien delayed draw term loan to Wealth Enhancement Group, LLC, a provider of comprehensive independent wealth management services to affluent and high net worth clients.

▪

$5.9 million of S + 7.00% first lien term loan to AlphaSense, Inc.;

▪

$5.8 million of S + 7.00% first lien term loan and $5.8 million unfunded delayed draw term loan to Persado, Inc.;

▪

$3.5 million of S + 7.50% second lien term loan to Outcomes Group Holdings, Inc.;  

▪

$3.2 million S + 6.25% first lien term loan and $0.6 million unfunded revolver to James Perse Enterprises, Inc.;

▪

$3.1 million S + 6.50% first lien delayed draw term loan funding (with an additional $3.2 million remaining unfunded) and $0.4 million unfunded revolver to Homerenew Buyer, Inc.; and

▪

$2.3 million S + 7.50% to BW Holding, Inc. (Brook & Whittle), which includes $1.9 million of second lien term loan and $0.4 million of delayed draw term loan funding.

▪

Sales, exits, and repayments were primarily concentrated in four complete exits in portfolio company investments and two partial paydowns:

▪

$6.7 million full repayment of first lien loans in Tempus, LLC (Epic Staffing);

▪

$6.4 million repayment of first lien term loans in Rhode Holdings, Inc. (Kaseya);

▪

$4.2 million partial repayment of unsecured term loan in GBFC, a non-accrual investment;

▪

$3.0 million full repayment of first lien term loan in SEP Vulcan Acquisition, Inc. (Tasktop);

▪

$2.6 million partial repayment of first lien term loan in MBS Opco, LLC; and

▪

$1.0 million full repayment of first lien term loan in Puppet, Inc.

•

During the quarter ended June 30, 2022, there were no new non-accrual investments. As of June 30, 2022, there were three non-accrual investment positions, representing approximately 3.5% and 12.3% of total debt and preferred stock investments, at fair value and cost, respectively, as compared to three non-accrual investment positions of approximately 4.5% and 14.1% of total debt and preferred stock investments at fair value and cost, respectively, as of March 31, 2022. The weighted average internal investment rating of the portfolio at FMV at June 30, 2022 declined slightly to 1.27 as compared to 1.25 at March 31, 2022 and improved from 1.37 at June 30, 2021.

•

During the quarter ended June 30, 2022, net unrealized losses were $(9.7) million, primarily attributable to spread widening and general market declines that occurred during the quarter. There were no realized gains or losses during the quarter.

•

At June 30, 2022, we had $22.4 million in cash and cash equivalents and $119.0 million of availability under our credit facility, subject to leverage restrictions, resulting in approximately $141.4 million of availability for deployment into portfolio company investments including current unfunded commitments. Committed but unfunded portfolio obligations at June 30, 2022 were $69.5 million, at par. 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 0.64x at quarter-end, and our 240% asset coverage ratio provided the Company with additional debt capacity of $119.0 million under its asset coverage requirements,

subject to borrowing capacity and borrowing base restrictions. Further, as of June 30, 2022, approximately 86% of our assets were invested in qualifying assets, exceeding the 70% regulatory requirement of a business development company.

•

For the second quarter of 2022, the Company declared a cash dividend of $0.10 per share, payable on October 6, 2022 to stockholders of record at the close of business on September 15, 2022.

June 30, 2022

December 31, 2021

Assets

(Unaudited)

Investments at fair value:

Non-controlled, non-affiliated investments (cost of $540,873,730 and $520,501,274)

$534,465,028

$526,504,945

Non-controlled, affiliated investments (cost of $4,921,145 and $5,027,616)

4,255,178

4,131,978

Controlled investments (cost of $84,922,381 and $89,097,765)

18,674,073

21,927,071

Total investments at fair value (cost of $630,717,256 and $614,626,655)

557,394,279

552,563,994

Cash and cash equivalents

22,357,869

12,750,121

Interest, dividends and fees receivable

2,750,717

3,671,722

Deferred debt issuance costs

1,285,143

1,511,418

Due from broker

1,097,291

—

Receivable for investments sold

81,034

690,550

Prepaid expenses and other assets

378,496

788,469

Total assets

$585,344,829

$571,976,274

Liabilities

Debt (net of deferred issuance costs of $1,030,354 and $425,272)

$236,969,646

$196,875,330

Distributions payable

7,363,184

7,392,972

Management fees payable

1,947,167

2,122,519

Income incentive fees payable

69,343

170,002

Accrued capital gains incentive fees

—

1,544,569

Interest and debt related payables

739,153

601,379

Payable for investments purchased

597,517

11,679,798

Accrued administrative expenses

299,262

384,225

Interest rate swap at fair value

198,694

—

Accrued expenses and other liabilities

1,716,216

1,553,507

Total liabilities

249,900,182

222,324,301

Net assets

Common stock, par value $.001 per share, 200,000,000 common shares authorized, 84,481,797 and 84,478,251 issued and 73,354,142 and 73,876,987 outstanding

84,482

84,478

Paid-in capital in excess of par

848,052,543

852,360,178

Distributable earnings (losses)

(442,176,304)

(434,303,297)

Treasury stock at cost, 11,127,655 and 10,601,264 shares held

(70,516,074)

(68,489,386)

Total net assets

335,444,647

349,651,973

Total liabilities and net assets

$585,344,829

$571,976,274

Net assets per share

$4.57

$4.73

Three Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Investment income

Interest income (excluding PIK):

Non-controlled, non-affiliated investments

$11,646,011

$9,210,827

$23,252,914

$17,260,077

Non-controlled, affiliated investments

—

—

—

11,867

Controlled investments

—

135,371

—

718,571

PIK interest income:

Non-controlled, non-affiliated investments

126,140

815,710

249,158

1,596,389

Non-controlled, affiliated investments

116,572

117,985

232,468

237,014

Dividend income (excluding PIK):

Non-controlled, affiliated investments

—

—

—

71,500

Controlled investments

—

536,908

—

1,047,975

PIK dividend income:

Non-controlled, non-affiliated investments

78,729

—

154,611

—

Other income:

Non-controlled, non-affiliated investments

301,503

40,958

562,091

186,990

Total investment income

12,268,955

10,857,759

24,451,242

21,130,383

Operating expenses

Interest and other debt expenses

2,860,691

2,969,177

5,589,642

5,722,273

Management fees

1,947,167

1,775,684

4,007,031

3,575,450

Incentive fees on income

69,343

—

88,356

—

Incentive fees on capital gains⁽¹⁾

(1,073,068)

—

(1,544,569)

—

Administrative expenses

299,262

314,886

664,769

637,001

Professional fees

207,489

254,834

510,346

666,993

Insurance expense

196,114

201,597

395,872

400,961

Director fees

153,125

153,125

306,250

306,250

Investment advisor expenses

25,819

87,500

51,638

175,000

Other operating expenses

462,797

258,232

766,596

613,514

Total expenses, before incentive fee waiver

5,148,739

6,015,035

10,835,931

12,097,442

Incentive fee waiver

—

—

—

—

Total expenses, net of incentive fee waiver

5,148,739

6,015,035

10,835,931

12,097,442

Net investment income⁽¹⁾

7,120,216

4,842,724

13,615,311

9,032,941

Realized and unrealized gain (loss) on investments, Interest rate swap and foreign currency:

Net realized gain (loss):

Non-controlled, non-affiliated investments

—

6,773

825,913

(639,501)

Non-controlled, affiliated investments

—

—

—

(7,989,591)

Controlled investments

—

(8,749,931)

—

(11,040,074)

Net realized gain (loss)

—

(8,743,158)

825,913

(19,669,166)

Net change in unrealized appreciation (depreciation):

Non-controlled, non-affiliated investments

(9,875,353)

27,464,721

(12,412,374)

37,333,277

Non-controlled, affiliated investments

(352,787)

153,217

229,671

6,988,190

Controlled investments

766,458

8,689,595

922,387

14,826,843

Interest rate swap

(198,694)

—

(198,694)

—

Foreign currency translation

—

(381,379)

—

(285,360)

Net change in unrealized appreciation (depreciation)

(9,660,376)

35,926,154

(11,459,010)

58,862,950

Net realized and unrealized gain (loss)

(9,660,376)

27,182,996

(10,633,097)

39,193,784

Net increase (decrease) in net assets resulting from operations

$(2,540,160)

$32,025,720

$2,982,214

$48,226,725

Net investment income per share—basic⁽¹⁾

$0.10

$0.07

$0.18

$0.12

Earnings (loss) per share—basic⁽¹⁾

$(0.03)

$0.43

$0.04

$0.65

Weighted average shares outstanding—basic

73,667,822

74,150,425

73,744,580

74,292,637

Net investment income per share—diluted⁽¹⁾⁽²⁾

$0.10

$0.07

$0.18

$0.12

Earnings (loss) per share—diluted⁽¹⁾⁽²⁾

$(0.03)

$0.38

$0.04

$0.58

Weighted average shares outstanding—diluted

87,860,082

91,144,162

89,329,839

91,286,374

⁽¹⁾

Net investment income and per share amounts displayed above are net of the reversal for incentive fees on capital gains which is reflected on a hypothetical liquidation basis in accordance with GAAP for the three and six month periods ended June 30, 2022. 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.

⁽²⁾

For the three and sixth month periods ended June 30, 2022, the impact of the hypothetical conversion of the 2022 Convertible Notes was antidilutive.

Three Months Ended

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

GAAP Basis:

Net Investment Income

$7,120,216

$4,842,724

$13,615,311

$9,032,941

Net Investment Income per share

0.10

0.07

0.18

0.12

Addback: GAAP incentive fee (reversal) based on capital gains

(1,073,068)

—

(1,544,569)

—

Addback: GAAP incentive fee based on Income net of incentive fee waiver (if any)

69,343

—

88,356

—

Pre-Incentive Fee¹:

Net Investment Income

$6,116,491

$4,842,724

$12,159,098

$9,032,941

Net Investment Income per share

0.08

0.07

0.16

0.12

Less: Incremental incentive fee based on Income net of incentive fee waiver (if any)

(69,343)

—

(88,356)

—

As Adjusted²:

Net Investment Income

$6,047,148

$4,842,724

$12,070,742

$9,032,941

Net Investment Income per share

0.08

0.07

0.16

0.12

¹

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

²

As Adjusted: Amounts are adjusted to remove the GAAP accrual (reversal) 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 six month periods ended June 30, 2022 and 2021, respectively. Under the Current 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 reflected the Company’s ongoing operating results and reflect the Company’s financial performance over time.