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): November 5,
2008
BLACKROCK
KELSO CAPITAL CORPORATION
(Exact
name of registrant as specified in its charter)
|
Delaware
|
001-33559
|
20-2725151
|
|
(State
or other jurisdiction of
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(Commission
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(IRS
Employer
|
|
incorporation
or organization)
|
File
Number)
|
Identification
Number)
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40 East 52nd 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:
|
[
]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
[
]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
[
]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[
]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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__________________________________
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ITEM
2.02.
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RESULTS
OF OPERATIONS AND FINANCIAL
CONDITION.
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On
November 6, 2008, the Registrant issued a press release announcing its financial
results for the quarter ended September 30, 2008. 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 “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.
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ITEM
7.01.
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REGULATION
FD DISCLOSURE.
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The
Registrant issued a press release, filed herewith as Exhibit 99.1, and by this
reference incorporated herein, on November 6, 2008 announcing the declaration of
a fourth quarter dividend of $0.43 per share. The dividend is payable on
December 31, 2008 to stockholders of record as of December 15,
2008.
The
information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is
being furnished and shall not be deemed “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.
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ITEM
8.01.
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OTHER
EVENTS.
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On
November 5, 2008, the Registrant adopted amendments to its dividend reinvestment
plan (the “plan”). Under the new plan, dividends are permitted to be
reinvested only if the reinvestment purchase price equals or exceeds the
Registrant’s net asset value on the date of payment. If the
reinvestment purchase price is below the Registrant’s net asset value, no
reinvestment will occur under the plan and all dividends will be paid to
shareholders in cash. The reinvestment purchase price under the new
plan is the greater of the Registrant’s net asset value or 95% of the closing
market price of the Registrant’s common stock on the date of
payment. In order to opt out of dividend reinvestment under the new
plan, participants must provide notice to the plan agent no later than the
record date for the dividend involved. The amendments are effective
as of their adoption date with respect to dividends paid
thereafter. A copy of the Amended and Restated Dividend Reinvestment
Plan is included as Exhibit 99.2 to this Form 8-K.
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ITEM
9.01.
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FINANCIAL
STATEMENTS AND EXHIBITS.
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(d)
Exhibits.
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Exhibit
Number
|
Description
|
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99.1
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Press
Release, dated as of November 6, 2008
|
|
99.2
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Amended
and Restated Dividend Reinvestment Plan, dated as of November 5,
2008
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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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BLACKROCK
KELSO CAPITAL CORPORATION
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|||
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Date: November
6, 2008
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By:
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/s/
Frank D. Gordon
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Name:
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Frank
D. Gordon
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||
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Title:
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Chief
Financial Officer
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EXHIBIT
INDEX
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Exhibit
Number
|
Description
|
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99.1
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Press
Release, dated as of November 6, 2008
|
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99.2
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Amended
and Restated Dividend Reinvestment Plan, dated as of November 5,
2008
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Exhibit
99.1
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Investor
Contact:
|
Press
Contact:
|
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Frank
Gordon
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Brian
Beades
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212.810.5858
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212.810.5596
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BlackRock
Kelso Capital Corporation Declares Regular Fourth Quarter Dividend of $0.43 per
Share,
Announces
September 30, 2008 Quarterly Financial Results
and
Adopts New Dividend Reinvestment Plan
New York, New York, November 6,
2008 - BlackRock Kelso Capital Corporation (NASDAQ:BKCC) (“BlackRock Kelso Capital” or the “Company”) announced today that its Board
of Directors has declared a fourth quarter dividend of $0.43 per share payable
on December 31, 2008 to stockholders of record as of December 15,
2008.
BlackRock
Kelso Capital also announced financial results for the quarter ended September
30, 2008.
HIGHLIGHTS:
Investment
Portfolio: $1.05 billion
Net
Assets: $641 million
Net
Asset Value per share: $11.52
Portfolio
Activity for the Quarter Ended September 30, 2008:
Cost
of investments during period: $8.7 million
Sales,
repayments and other exits during period: $60.6 million
Number
of portfolio companies at end of period: 62
Operating
Results for the Quarter Ended September 30, 2008 (in thousands, except per share
amounts):
Net
investment income: $25,582
Net
investment income per share: $0.47
Net
realized and unrealized losses: ($44,375)
Net
realized and unrealized losses per share: ($0.81)
Net
decrease in net assets from operations: ($18,794)
Net
decrease in net assets from operations per
share: ($0.34)
Portfolio
and Investment Activity
During
the three months ended September 30,
2008, we invested $8.7 million in our existing portfolio
companies. This compares to investing $124.0 million across new and
existing portfolio companies for the three months ended September 30,
2007. Additionally, we received proceeds from sales/repayments of
principal of approximately $60.6 million during the three months ended September
30, 2008, versus $90.8 million for the three months ended September 30,
2007.
At
September 30, 2008, our portfolio consisted of 62 portfolio companies and was
invested 57% in senior secured loans, 29% in unsecured or subordinated debt
securities, 5% in senior secured notes, 3% in equity investments and 6% in cash,
cash equivalents and foreign currency. This compares to 67% in senior
secured loans, 23% in unsecured or subordinated debt securities, 4% in senior
secured notes, 6% in equity investments and less than 1% in cash, cash
equivalents and foreign currency at September 30, 2007. Our average
portfolio company investment by value was approximately $17.0 million at
September 30, 2008, versus $18.6 million at September 30, 2007. At
September 30, 2008, 3.6% of our total debt investments at amortized cost (or
1.6% at fair value) were on non-accrual status.
The
weighted average yield of the debt and income-producing equity securities in our
portfolio was 11.9% at September 30, 2008 and 12.5% at September 30, 2007,
respectively. The weighted average yields on our senior secured loans
and other debt securities were 11.6% and 12.2%, respectively, at September 30,
2008, versus 12.3% and 13.0% at September 30, 2007. Yields exclude
common equity investments,
preferred equity investments with no stated dividend rate, short-term
investments, cash, cash equivalents and foreign currency.
1
We
continue to have substantial capital resources available to fund additional
investments. At September 30, 2008, we had $61.3 million in cash and
cash equivalents and $54.0 million available under our amended and restated
senior secured, multi-currency credit facility.
Since
our inception of operations in July 2005, we have invested in excess of $1.7
billion across more than 105 portfolio companies in transactions involving more
than 65 financial sponsors.
Results
of Operations
Results
comparisons are for the three and nine months ended September 30, 2008 and
2007.
Investment
Income
Investment
income totaled $37.4 million and $108.0 million, respectively, for the three and
nine months ended September 30,
2008, compared to $34.2 million and $92.4 million for the three and nine months
ended September 30, 2007. The increase in investment income for the
three and nine months ended September 30, 2008 reflects the growth of our
portfolio as a result of the deployment of debt capital under our credit
facility and equity capital from our initial public offering in July
2007. Many of our floating rate debt investments bear interest based
on the London Interbank Offered Rate (LIBOR). For the 2008 periods,
investment income increased despite lower prevailing levels of LIBOR compared to
the prior periods, as fixed rate instruments as a percentage of our debt
investments increased to 53% at September 30, 2008 from 37% at September 30,
2007. Origination, closing and/or commitment fees associated with
investments in portfolio companies are accreted into interest income over the
respective terms of the applicable loans.
Expenses
Net
expenses for the three and nine months ended September 30, 2008 were $11.9
million and $36.0 million, respectively, versus $11.8 million and $38.7 million
for the three and nine months ended September 30, 2007. Of these
totals, for the three and nine months ended September 30, 2008, $4.3 million and
$13.8 million, respectively, were interest and other credit facility expenses,
versus $5.3 million and $14.5 million for the three and nine months ended
September 30, 2007. In addition, ($0.1) million and $9.4
million of performance-based incentive fees were included in these totals for
the three and nine months ended September 30, 2007,
respectively. There were no incentive fees for the three and nine
months ended September 30, 2008 as the performance hurdle rate was not
achieved. Expenses net of performance-based incentive fees and
interest and other credit facility expenses for the three and nine months ended
September 30, 2008 were $7.6 million and $22.1 million, respectively, versus
$6.6 million and $16.9 million for the three and nine months ended September 30,
2007. Net expenses for the three and nine months ended September 30,
2007 were net of base management fee waivers of zero and $2.1 million,
respectively, which terminated upon the completion of our IPO in
2007. These net expenses consist of base management fees (net of
waivers), administrative services expenses, professional fees, director fees,
investment advisor expenses, insurance expenses, amortization of debt issuance
costs and miscellaneous other expenses. In comparison to the prior
periods, interest and other credit facility expenses declined due to lower
prevailing levels of LIBOR. The increase in base management fees and
general and administrative expenses was driven primarily by the growth of our
portfolio and higher costs associated with being a publicly-traded company
following our IPO. Although we did not incur any performance-based
incentive fees during the nine months ended September 30, 2008, we may incur
such fees in the future relating to investment performance since December 31,
2007 measured on a trailing four quarters’ basis.
2
Net
Investment Income
Net
investment income totaled $25.6 million and $72.1 million, or $0.47 per share
and $1.34 per share, respectively, for the three and nine months ended September
30, 2008. For the three and nine months ended September 30, 2007, net
investment income totaled $22.4 million and $53.7 million, or $0.44 per share
and $1.23 per share, respectively.
Net
Realized Gain or Loss
Total
net realized gain or loss for the three and nine months ended September 30, 2008
was a gain of $29.2 thousand and a loss of ($1.3) million, respectively,
compared to gains of $0.3 million and $0.6 million for the three and nine months
ended September 30, 2007. Net realized gain or loss derives from
dispositions of certain portfolio investments offset by losses on our forward
foreign currency contracts used to hedge investments denominated in foreign
currencies.
Net
Unrealized Depreciation
For
the three and nine months ended September 30, 2008, the net change in unrealized
depreciation on the Company’s investments and foreign currency translation was
($44.4) million and ($117.2) million, respectively, versus ($20.2) million and
($22.2) million for the three and nine months ended September 30,
2007. Net unrealized depreciation was ($174.7) million at September
30, 2008 and ($20.8) million at September 30, 2007. The net change in
unrealized depreciation was a result of a reduction in multiples used to
estimate the fair value of our investments and the underperformance of some
portfolio companies, particularly Tygem Holdings, Inc., Mattress Giant Corp. and
Wastequip, Inc. Other portfolio investments experienced significant
unrealized depreciation as a result of distressed sales by third parties in
illiquid markets, which can have a disproportionate effect on the fair value of
an illiquid portfolio investment. Another contributing factor to the
increase in unrealized depreciation was market-wide increases in interest
yields. Market-wide movements are not necessarily indicative of any
fundamental change in the condition or prospects of our portfolio
companies.
Net
Change in Net Assets from Operations
For
the three and nine months ended September 30, 2008, the net change in net assets
from operations was ($18.8) million and ($46.4) million, or ($0.34) per share
and ($0.87) per share, respectively, compared to $2.5 million and $32.1 million,
or $0.05 per share and $0.74 per share, for the three and nine months ended
September 30, 2007.
Liquidity
and Capital Resources
At
September 30, 2008, we had $61.3 million in cash and cash equivalents, and $491
million in borrowings outstanding and $54 million available for use under our
$545 million credit facility, which matures in December 2010.
On
October 24, 2008, our Form N-2 shelf registration statement was declared
effective by the Securities and Exchange Commission (“SEC”), which will permit
us to offer, from time to time, up to $1 billion of our common stock, preferred stock, debt securities, warrants
representing rights to purchase shares of our common stock, preferred stock or
debt securities and subscription rights.
In the
future, we may raise additional equity or debt capital in the public or
private markets or may securitize a portion of our investments. The
primary use of such funds is expected to be investments in portfolio companies,
cash distributions to common stockholders and for other general
corporate purposes.
As a
closed-end investment company regulated as a BDC under the 1940 Act, we are
prohibited from selling shares of our common stock at a price below the current
net asset value of the stock, or NAV, unless our
stockholders approve such a sale and our Board of Directors makes certain
determinations. On April 24, 2008, our stockholders approved a proposal
authorizing us to issue shares of our common stock for a twelve-month period,
with the approval of our Board of Directors, at a price below the then-current
NAV. The approval expires on the earlier of April 23, 2009 or on the
date of our 2009 Annual Meeting of Stockholders. Our Board of
Directors has adopted a policy to limit our ability to sell common stock at a
price below NAV to circumstances in which the price per share of the common
stock is equal to 95% or greater of its NAV in effect on the date any such sale
is priced. Any sale of our common stock at a price below NAV would
have a dilutive effect on our NAV.
3
Certain
institutional shareholders beneficially own, in the aggregate, approximately
76.4% of the outstanding shares of our common stock at September 30,
2008. On December 26, 2008, upon the expiration of a lock-up
agreement entered into in connection with our initial public offering, all of
the outstanding shares of our common stock owned by such institutions will
become available for sale, subject to compliance with applicable securities
laws. Sales of substantial amounts of our common stock, or the availability of
common stock for sale, could adversely affect the prevailing market price of our
common stock. If this occurs and continues, it could impair our ability to raise
additional capital through the sale of common stock should we desire to do
so.
Dividends
Dividends
paid to stockholders for the three and nine months ended September 30, 2008
totaled $23.5 million, or $0.43 per share, and $69.1 million, or $1.29 per
share, respectively. For the three and nine months ended September
30, 2007, dividends paid totaled $21.5 million, or $0.42 per share, and $54.7
million, or $1.26 per share, respectively. Tax characteristics of all
dividends will be reported to stockholders on Form 1099 after the end of the
calendar year.
We
have elected to be taxed as a regulated investment company under Subchapter M of
the Internal Revenue Code. To maintain our status as a regulated investment
company, we must distribute annually to our stockholders at least 90% of our
investment company taxable income and at least 98% of our income (both ordinary
income and net capital gains) to avoid an excise tax. We intend to
make distributions to our stockholders on a quarterly basis of substantially all
of our taxable net investment income. We also intend to make
distributions of net realized capital gains, if any, at least
annually. We may, at our discretion, 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 excess taxable income as
required.
We
may not be able to achieve operating results that will allow us to make
dividends and distributions at a specific level or to increase the amount of
these dividends and distributions from time to time. In addition, we may be
limited in our ability to make dividends and distributions due to the asset
coverage test for borrowings when applicable to us as a business development
company under the Investment Company Act of 1940 (the “1940 Act”) and due to
provisions in our credit facilities. If we do not distribute a certain
percentage of our income annually, we will suffer adverse tax consequences,
including possible loss of our status as a regulated investment company. We
cannot assure stockholders that they will receive dividends and distributions at
any particular level or at all.
With
respect to the dividends paid to stockholders, income we receive from
origination, structuring, closing, commitment and other upfront fees associated
with investments in portfolio companies is treated as taxable income and
accordingly, distributed to stockholders. For the three and nine
months ended September 30,
2008, these fees totaled zero and $2.6 million, respectively. For the
three and nine months ended September 30,
2007, such fees totaled $1.5 million and $5.3 million,
respectively.
4
Dividend
Reinvestment and Adoption of New Dividend Reinvestment Plan
We
maintain an “opt out” dividend reinvestment plan for our common stockholders. As
a result, except as described below, if we declare a dividend, stockholders’
cash dividends will be automatically reinvested in additional shares of our
common stock, unless they specifically “opt out” of the dividend reinvestment
plan so as to receive cash dividends. Dividends reinvested pursuant
to our previous dividend reinvestment plan totaled $28.7 million for the nine
months ended September 30, 2008, versus $60.6 million for the nine months ended
September 30, 2007. Pursuant to our previous dividend reinvestment
plan, the dividend reinvestment price for the dividend paid to stockholders on
September 30, 2008 was 95% of the closing market price of our common stock on
that date, or $10.9535 per common share, which was less than our net asset
value. Reinvestment at this price resulted in dilution of our
net asset value of approximately $0.01 per share at September 30,
2008.
We
have adopted, and our Board of Directors has approved, an amended and restated
dividend reinvestment plan. Under the new plan, dividends are
permitted to be reinvested only if the reinvestment purchase price equals or
exceeds our net asset value on the date of payment, as permitted under SEC
guidelines. If the reinvestment purchase price is below our net asset
value, no reinvestment will occur and all dividends will be paid to shareholders
in cash. The reinvestment purchase price under the new plan is the
greater of our net asset value or 95% of the closing market price of our common
stock on the date of payment. Our amended and restated dividend
reinvestment plan is effective immediately. Any dividends reinvested
under our previous dividend reinvestment plan are not affected.
Share
Repurchase Plan
On
August 7, 2008, our Board of Directors approved a share repurchase plan under
which we may repurchase up to 2.5 percent (or 1,365,613 shares) of our
outstanding shares of common stock from time to time in open market or privately
negotiated transactions. The repurchase plan does not obligate us to
acquire any specific number of shares and may be discontinued at any
time. We intend to fund any repurchases with available
cash. The repurchase plan is expected to be in effect through the
earlier of September 30, 2009 or until the approved number of shares have been
repurchased. During the three months ended September 30, 2008, we
purchased a total of 20,348 shares of our common stock on the open market for
$192,264, excluding brokerage commissions. Through October 31, 2008,
we had purchased a total of 245,238 additional shares for $2,145,369, excluding
brokerage commissions. We currently hold the shares we repurchase in
treasury.
Notice
is hereby given in accordance with Section 23(c) of the 1940 Act that from time
to time we may purchase shares of our common stock in the open market at
prevailing market prices.
Conference
Call
BlackRock
Kelso Capital will host a web cast/teleconference call at 4:30 p.m. (Eastern
Time) on Thursday, November 6, 2008 to discuss its third quarter 2008 financial
results. All interested parties are welcome to
participate. You can access the teleconference by dialing, from the
United States, (800) 374-0176, or from outside the United States, (706)
679-3431, shortly before 4:30 p.m. and referencing the BlackRock Kelso Capital
Corporation Conference Call (ID Number 69098617). A live, listen-only
web cast will also be available via the investor relations section of
www.blackrockkelso.com.
Both
the teleconference and web cast will be available for replay by 8:00 p.m. on
Thursday, November 6, 2008 and ending at midnight on Thursday, November 13,
2008. To access the replay of the teleconference, callers from
the United States should dial (800) 642-1687 and callers from outside the United
States should dial (706) 645-9291 and enter the Conference ID Number
69098617. To access the web cast, please visit the investor
relations section of www.blackrockkelso.com.
5
BlackRock
Kelso Capital Corporation
Statements
of Assets and Liabilities
|
September
30,
2008
(Unaudited)
|
December 31,
2007
|
|||||||
|
Assets:
|
||||||||
|
Investments
at fair value:
|
||||||||
|
Non-controlled,
non-affiliated investments (amortized cost of $1,122,335,709 and
$1,049,585,229)
|
$ | 996,248,332 | $ | 1,018,013,709 | ||||
|
Non-controlled,
affiliated investments (amortized cost of $64,337,949 and
$66,907,657)
|
54,876,927 | 65,412,682 | ||||||
|
Controlled
investments (amortized cost of $42,467,130 and
$38,881,854)
|
— | 14,834,395 | ||||||
|
Total
investments at fair value (amortized cost of $1,229,140,788 and $
1,155,374,470)
|
1,051,125,259 | 1,098,260,786 | ||||||
|
Cash
and cash equivalents
|
61,330,283 | 5,077,695 | ||||||
|
Foreign
currency at fair value (cost of $742,667 and $10,291)
|
733,078 | 10,864 | ||||||
|
Net
unrealized appreciation on forward foreign currency
contracts
|
3,309,690 | — | ||||||
|
Interest
receivable
|
19,125,247 | 14,260,266 | ||||||
|
Dividends
receivable
|
3,425,201 | 1,796,615 | ||||||
|
Prepaid
expenses and other assets
|
3,064,093 | 2,414,954 | ||||||
|
Total
Assets
|
$ | 1,142,112,851 | $ | 1,121,821,180 | ||||
|
Liabilities:
|
||||||||
|
Payable
for investments purchased
|
$ | 1,060,000 | $ | — | ||||
|
Net
unrealized depreciation on forward foreign currency
contracts
|
— | 451,944 | ||||||
|
Credit
facility payable
|
491,000,000 | 381,300,000 | ||||||
|
Interest
payable on credit facility
|
1,226,004 | 1,508,277 | ||||||
|
Dividend
distributions payable
|
— | 3,310,606 | ||||||
|
Base
management fees payable
|
5,841,124 | 5,606,213 | ||||||
|
Accrued
administrative services
|
262,741 | 361,118 | ||||||
|
Other
accrued expenses and payables
|
1,554,092 | 1,091,153 | ||||||
|
Total
Liabilities
|
500,943,961 | 393,629,311 | ||||||
|
Net
Assets:
|
||||||||
|
Common
stock, par value $.001 per share, 100,000,000 common shares authorized,
55,670,594 and 52,825,109 issued and 55,650,246 and 52,825,109
outstanding
|
55,650 | 52,825 | ||||||
|
Paid-in
capital in excess of par
|
818,871,595 | 790,378,102 | ||||||
|
Distributions
in excess of net investment income
|
(2,463,476 | ) | (5,411,353 | ) | ||||
|
Accumulated
net realized gain (loss)
|
(554,093 | ) | 729,635 | |||||
|
Net
unrealized depreciation
|
(174,740,786 | ) | (57,557,340 | ) | ||||
|
Total
Net Assets
|
641,168,890 | 728,191,869 | ||||||
|
Total
Liabilities and Net Assets
|
$ | 1,142,112,851 | $ | 1,121,821,180 | ||||
|
Net
Asset Value Per Share
|
$ | 11.52 | $ | 13.78 | ||||
6
|
BlackRock
Kelso Capital Corporation
Statements
of Operations (Unaudited)
|
Three
months ended
September
30,
2008
|
Three
months ended
September
30,
2007
|
Nine
months ended
September
30,
2008
|
Nine
months ended
September
30,
2007
|
||||||||||||
|
Investment
Income:
|
||||||||||||||||
|
From
non-controlled, non-affiliated investments:
|
||||||||||||||||
|
Interest
|
$ | 35,516,763 | $ | 30,901,350 | $ | 101,133,085 | $ | 85,410,789 | ||||||||
|
Dividends
|
472,562 | 369,249 | 1,257,265 | 585,317 | ||||||||||||
|
Other
income
|
16,142 | 16,500 | 18,438 | 34,995 | ||||||||||||
|
From
non-controlled, affiliated investments:
|
||||||||||||||||
|
Interest
|
1,170,717 | 1,141,468 | 3,525,042 | 1,983,094 | ||||||||||||
|
Dividends
|
257,618 | 568,083 | 994,668 | 653,925 | ||||||||||||
|
Other
Income
|
— | — | — | 300,000 | ||||||||||||
|
From
controlled investments:
|
||||||||||||||||
|
Interest
|
11,910 | 951,449 | 1,085,667 | 2,801,006 | ||||||||||||
|
Dividends
|
— | 215,787 | — | 654,555 | ||||||||||||
|
Total
investment income
|
37,445,712 | 34,163,886 | 108,014,165 | 92,423,681 | ||||||||||||
|
Expenses:
|
||||||||||||||||
|
Base
management fees
|
5,841,124 | 5,319,049 | 16,991,573 | 13,546,675 | ||||||||||||
|
Incentive
management fees
|
— | (112,226 | ) | — | 9,412,097 | |||||||||||
|
Administrative
services
|
261,744 | 325,608 | 867,177 | 804,084 | ||||||||||||
|
Professional
fees
|
622,532 | 260,960 | 1,461,003 | 803,746 | ||||||||||||
|
Director
fees
|
82,450 | 121,688 | 275,185 | 251,860 | ||||||||||||
|
Investment
advisor expenses
|
283,301 | 218,221 | 822,150 | 608,488 | ||||||||||||
|
Insurance
|
119,781 | 112,146 | 396,217 | 201,921 | ||||||||||||
|
Interest
and credit facility fees
|
4,311,893 | 5,321,907 | 13,818,524 | 14,471,228 | ||||||||||||
|
Amortization
of debt issuance costs
|
149,068 | 62,819 | 482,493 | 207,788 | ||||||||||||
|
Other
|
191,941 | 178,092 | 840,365 | 444,533 | ||||||||||||
|
Expenses
before management fee waiver
|
11,863,834 | 11,808,264 | 35,954,687 | 40,752,420 | ||||||||||||
|
Base
management fee waiver
|
— | — | — | (2,056,907 | ) | |||||||||||
|
Net
expenses
|
11,863,834 | 11,808,264 | 35,954,687 | 38,695,513 | ||||||||||||
|
Net
Investment Income
|
25,581,878 | 22,355,622 | 72,059,478 | 53,728,168 | ||||||||||||
|
Realized
and Unrealized Gain (Loss):
|
||||||||||||||||
|
Net
realized gain (loss):
|
||||||||||||||||
|
Non-controlled,
non-affiliated investments
|
187,711 | 860,090 | 314,350 | 1,529,132 | ||||||||||||
|
Non-controlled,
affiliated investments
|
— | — | 112,783 | — | ||||||||||||
|
Foreign
currency
|
(158,501 | ) | (531,262 | ) | (1,710,861 | ) | (923,992 | ) | ||||||||
|
Net
realized gain (loss)
|
29,210 | 328,828 | (1,283,728 | ) | 605,140 | |||||||||||
|
Net
change in unrealized appreciation or depreciation on:
|
||||||||||||||||
|
Non-controlled,
non-affiliated investments
|
(36,330,023 | ) | (17,055,475 | ) | (94,515,860 | ) | (14,338,411 | ) | ||||||||
|
Non-controlled,
affiliated investments
|
(1,700,589 | ) | 3,898,046 | (7,966,047 | ) | 3,885,522 | ||||||||||
|
Controlled
investments
|
(9,392,438 | ) | (5,653,788 | ) | (18,419,671 | ) | (10,792,963 | ) | ||||||||
|
Foreign
currency translation
|
3,018,444 | (1,407,763 | ) | 3,718,130 | (970,173 | ) | ||||||||||
|
Net
change in unrealized appreciation or depreciation
|
(44,404,606 | ) | (20,218,980 | ) | (117,183,448 | ) | (22,216,025 | ) | ||||||||
|
Net
realized and unrealized gain (loss)
|
(44,375,396 | ) | (19,890,152 | ) | (118,467,176 | ) | (21,610,885 | ) | ||||||||
|
Net Increase (Decrease) in Net
Assets Resulting from Operations
|
$ | (18,793,518 | ) | $ | 2,465,470 | $ | (46,407,698 | ) | $ | 32,117,283 | ||||||
|
Net
Investment Income Per Share
|
$ | 0.47 | $ | 0.44 | $ | 1.34 | $ | 1.23 | ||||||||
|
Earnings
(Loss) Per Share
|
$ | (0.34 | ) | $ | 0.05 | $ | (0.87 | ) | $ | 0.74 | ||||||
|
Basic
and Diluted Weighted-Average Shares Outstanding
|
54,632,752 | 51,190,376 | 53,588,041 | 43,600,033 | ||||||||||||
7
About
BlackRock Kelso Capital Corporation
BlackRock
Kelso Capital Corporation is a business development company formed in early 2005
by its management team, BlackRock, Inc. and principals of Kelso & Company,
to provide 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.
Forward-Looking
Statements
This
press release, and other statements that BlackRock Kelso
Capital may
make, may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act, with respect to
BlackRock Kelso
Capital’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
similar expressions, or future
or conditional verbs such as “will,” “would,” “should,” “could,” “may”
or
similar expressions. The information contained on our website is not a part of
this press release.
BlackRock
Kelso
Capital cautions
that forward-looking statements are subject to
numerous assumptions, risks and uncertainties, which change over time.
Forward-looking statements speak only as of the date they are made, and
BlackRock Kelso
Capital 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 Kelso
Capital'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 ability
of our portfolio companies to achieve their objectives;
(7)
our
expected financings and investments;
(8)
the
adequacy of our cash resources and working capital; (9) the
timing of cash flows, if any, from the operations of
our portfolio companies; (10) the ability of our
investment advisor to
locate suitable investments for us and to monitor and administer our
investments; (11) the ability of our investment
advisor to
attract and retain highly talented professionals; (12)
fluctuations in foreign currency exchange rates; and (13) the
impact of changes to tax legislation and, generally, our
tax position.
BlackRock Kelso Capital’s Annual Report on Form 10-K for the year ended
December 31, 2007 filed with the SEC identifies additional factors that can
affect forward-looking statements.
Available
Information
BlackRock Kelso Capital’s filings with the SEC, press releases, earnings releases and other financial information are available on its website at www.blackrockkelso.com.
# # #
8
Exhibit
99.2
BLACKROCK
KELSO CAPITAL CORPORATION
AMENDED
AND RESTATED AUTOMATIC DIVIDEND REINVESTMENT PLAN
TERMS
AND CONDITIONS
Pursuant
to this Automatic Dividend Reinvestment Plan (the "Plan") of BlackRock
Kelso Capital Corporation (the "Company"), unless a
holder (a "Shareholder") of the
Company's shares of common stock, par value $0.001 per share (the "Common Shares"),
otherwise elects and subject to the Reinvestment Condition described below, all
dividends and distributions on such Shareholder's Common Shares will be
automatically paid by the Company in the form of newly issued or treasury Common
Shares to PNC Global Investment Servicing Inc. ("PGIS"), as agent for Shareholders in
administering the Plan (the "Plan
Agent"). Shareholders who elect not to participate in the Plan
or, if the Reinvestment Condition is not met, all Shareholders will receive all
dividends and other distributions in cash paid by check mailed directly to the
Shareholder of record (or, if the Common Shares are held in street or other
nominee name, then to such nominee) by PGIS as the Dividend Disbursing
Agent. Participants may elect not to participate in the Plan and to
receive all dividends and distributions in cash by sending written instructions
to PGIS, as the Dividend Disbursing Agent, at the address set forth
below. Participation in the Plan is completely voluntary and may be
terminated or resumed at any time without penalty by written notice if received
by the Plan Agent no later than the record date for the dividend or distribution
involved; otherwise such termination or resumption will be effective with
respect to any subsequently declared dividend or distribution.
The Plan Agent will open an account for
each Shareholder under the Plan in the same name in which such Shareholder's
Common Shares are registered. Whenever the Company declares a
dividend or a distribution (collectively referred to as "dividends"), if the
Reinvestment Condition is not met, all Shareholders will receive the dividend
payable in cash. If the Reinvestment Condition is met,
non-participants in the Plan will receive the dividend payable in cash and
participants in the Plan will receive the dividend in newly issued or treasury
Common Shares. The number of shares to be paid to the Plan Agent for
the participants’ accounts shall be determined as follows: If the
Company’s Common Shares are trading at or above net asset value at the time of
valuation (the “Reinvestment
Condition”), the Company will deliver to the Plan Agent newly issued or
treasury Common Shares at a price equal to the greater of (i) the Company’s
net asset value per Common Share on that date or (ii) 95% of the Company’s
market price per Common Share on that date. Solely for purposes of
determining the net asset value of the Company’s Common Shares under the
provisions of the Plan, the “time of valuation” shall be the date of payment of
the dividend.
The
Plan Agent will maintain all Shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the accounts, including information
needed by Shareholders for tax records. Common Shares in the account
of each Plan participant will be held by the Plan Agent on behalf of the Plan
participant.
In
the case of Shareholders such as banks, brokers or nominees that hold Common
Shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of Common Shares certified from time to time
by the record Shareholder and held for the account of beneficial owners who
participate in the Plan.
2
There
will be no brokerage charges with respect to Common Shares issued directly by
the Company as a result of dividends or capital gains distributions payable
either in Common Shares or in cash.
For
the avoidance of doubt, no Common Shares will be issued under the Plan under any
circumstance that may violate the Investment Company Act of 1940, as amended, or
any rules issued thereunder.
VOTING
Each
Shareholder proxy will include those Common Shares received pursuant to the
Plan. The Plan Agent will forward all proxy solicitation materials to
participants and vote proxies for Common Shares held pursuant to the Plan in
accordance with the instructions of the participants.
TAXATION
The
automatic reinvestment of dividends will not relieve participants of any
federal, state or local income tax that may be payable (or required to be
withheld) on such dividends.
AMENDMENT
OF THE PLAN
The
Plan may be amended or terminated by the Company. There is no direct
service charge to participants in the Plan; however, the Company reserves the
right to amend the Plan to include a service charge payable by the
participants. Notice will be provided to Plan participants of any
amendments as soon as practicable after such action by the Company.
INQUIRIES
REGARDING THE PLAN
All
correspondence concerning the Plan should be directed to the Plan Agent at 301
Bellevue Parkway, Wilmington, DE 19809.
APPLICABLE
LAW
These
terms and conditions shall be governed by the laws of the State of New York
without regard to its conflicts of laws provisions.
EXECUTION
To
record the adoption of the Plan as of November 5, 2008, the Company has caused
this Plan to be executed in the name and on behalf of the Company by a duly
authorized officer.
|
By
and on behalf of
|
||
|
BLACKROCK
KELSO CAPITAL CORPORATION
|
||
| /s/ Michael B. Lazar | ||
|
By: Michael
B. Lazar
|
||
|
Title:
Chief Operating Officer
|
||
3