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): March 10,
2009
BLACKROCK
KELSO CAPITAL CORPORATION
(Exact
name of registrant as specified in its charter)
|
Delaware
|
001-33559
|
20-2725151
|
|
(State
or other jurisdiction of
|
(Commission
|
(IRS
Employer
|
|
incorporation
or organization)
|
File
Number)
|
Identification
Number)
|
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:
|
[
]
|
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))
|
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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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__________________________________
|
ITEM
2.02.
|
RESULTS
OF OPERATIONS AND FINANCIAL CONDITION.
|
On
March 10, 2009, the Registrant issued a press release announcing its financial
results for the fourth quarter and fiscal year ended December 31, 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 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.
|
ITEM
7.01.
|
REGULATION
FD DISCLOSURE.
|
The
Registrant issued a press release, filed herewith as Exhibit 99.1, and by this
reference incorporated herein, on March 10, 2009 announcing the declaration of a
first quarter dividend of $0.16 per share. The dividend is payable on
April 3, 2009 to stockholders of record as of March 20, 2009.
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.
|
ITEM
9.01.
|
FINANCIAL
STATEMENTS AND EXHIBITS.
|
(d)
Exhibits.
|
Exhibit
Number
|
Description
|
|
99.1
|
Press
Release, dated as of March 10, 2009
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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.
|
BLACKROCK
KELSO CAPITAL CORPORATION
|
||||
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Date: March
10, 2009
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By:
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/s/
Frank D. Gordon
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||
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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
|
|
99.1
|
Press
Release, dated as of March 10, 2009
|
Exhibit
99.1
 |
||
|
Investor
Contact:
|
Press
Contact:
|
|
|
Frank
Gordon
|
Brian
Beades
|
|
|
212.810.5858
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212.810.5596
|
|
BlackRock
Kelso Capital Corporation Declares Regular First Quarter Dividend of $0.16 per
Share,
Announces
Financial Results for the Quarter and Year Ended December 31, 2008
New York, New York, March 10,
2009 - BlackRock Kelso Capital Corporation (NASDAQ:BKCC) (“BlackRock Kelso Capital” or the “Company”) announced today that its Board
of Directors has declared a first quarter dividend of $0.16 per share payable on
April 3, 2009 to stockholders of record as of March 20, 2009.
BlackRock
Kelso Capital recognizes that the stability of its dividend is very important to
its stockholders. However, we believe that the current economic
environment is unprecedented and unpredictable. In light of the
uncertain environment, we believe it is prudent to reduce our dividend until
market conditions normalize. Retaining capital in this manner is a
precautionary measure that will enable us to protect our balance sheet by
reducing borrowings under our credit facility, to make additional investments
and to preserve operating flexibility. At December 31, 2008, the
Company was in compliance with regulatory coverage requirements with an asset
coverage ratio of 220% and was in compliance with all financial covenants under
its credit facility. The Company has made, and intends to continue to
make, timely distributions sufficient to satisfy the annual distribution
requirements to maintain its qualification as a regulated investment company
under the Internal Revenue Code.
BlackRock
Kelso Capital also announced financial results for the quarter and year ended
December 31, 2008.
HIGHLIGHTS:
Investment
Portfolio: $943 million
Net
Assets: $510 million
Net
Indebtedness (borrowings less cash and cash equivalents): $411
million
Net
Asset Value per share: $9.23
Portfolio
Activity for the Quarter Ended December 31, 2008:
Cost
of investments during period: $13.9 million
Sales,
repayments and other exits during period: $8.2 million
Number
of new portfolio companies invested: 1
Portfolio
Activity for the Year Ended December 31, 2008:
Cost
of investments during period: $197.3 million
Sales,
repayments and other exits during period: $120.3 million
Number
of new portfolio companies invested: 7
Number
of portfolio company exits: 4
Number
of portfolio companies at end of period: 63
Operating
Results for the Quarter Ended December 31, 2008 (in thousands, except per share
amounts):
Net
investment income: $23,044
Net
investment income per share: $0.42
Dividends
declared per share: $0.43
Net
realized and unrealized losses: ($127,143)
Net
realized and unrealized losses per share: ($2.30)
Net
decrease in net assets from operations: ($104,100)
Net
decrease in net assets from operations per
share: ($1.88)
Operating
Results for the Year Ended December 31, 2008 (in thousands, except per share
amounts):
Net
investment income: $95,103
Net
investment income per share: $1.76
Dividends
declared per share: $1.72
Net
realized and unrealized losses: ($245,610)
Net
realized and unrealized losses per share: ($4.54)
Net
decrease in net assets from operations: ($150,507)
Net
decrease in net assets from operations per
share: ($2.78)
Portfolio
and Investment Activity
During
the quarter ended December 31, 2008, we invested $13.9 million across one new
and two existing portfolio companies. This compares to investing
$76.2 million across two new and three existing portfolio companies for the
quarter ended December 31, 2007. Sales and repayments of investment
principal totaled $8.2 million during the quarter ended December 31, 2008 versus
$36.5 million during the quarter ended December 31, 2007.
During
the year ended December 31, 2008, we invested $197.3 million across 7 new and 10
existing portfolio companies. This compares to investing $711.3
million across 26 new and 12 existing portfolio companies for the year ended
December 31, 2007. Additionally, we received proceeds from
sales/repayments of investment principal of approximately $120.3 million and
$310.4 million for the years ended December 31, 2008 and 2007,
respectively.
At
December 31, 2008, our portfolio consisted of 63 portfolio companies and was
invested 61% in senior secured loans, 28% in unsecured or subordinated debt
securities, 6% in senior secured notes, 3% in equity investments and 2% in cash,
cash equivalents and foreign currency. This compares to 64% in senior
secured loans, 26% in unsecured or subordinated debt securities, 5% in equity
investments, 4% in senior secured notes and approximately 1% in cash, cash
equivalents and foreign currency at December 31, 2007. Our average
portfolio company investment at amortized cost was approximately $19.6 million
at December 31, 2008, versus $19.3 million at December 31, 2007. At
December 31, 2008, 1.8% of our total debt investments at fair value (or 6.6% at
amortized cost) were on non-accrual status.
The
weighted average yields of the debt and income producing equity securities in
our portfolio at their current cost basis were 11.0% at December 31, 2008 and
12.4% at December 31, 2007. The weighted average yields on our senior
secured loans and other debt securities at their current cost basis were 10.2%
and 12.2%, respectively, at December 31, 2008, versus 11.9% and 13.3% at
December 31, 2007. Yields exclude common equity investments,
preferred equity investments with no stated dividend rate, short-term
investments, cash, cash equivalents and foreign currency.
At
December 31, 2008, we had $15 million in cash and cash equivalents and $119
million available under our 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 quarters and years ended December 31, 2008 and
2007.
Investment
Income
Investment
income totaled $35.2 million and $35.4 million for the quarters ended December
31, 2008 and 2007, respectively, and $143.2 million and $127.8 million for the
years ended December 31, 2008 and 2007, respectively. The increase in
investment income for the year ended December 31, 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. Total investments at their current cost and borrowings were
$1.24 billion and $426.0 million at December 31, 2008, compared to $1.16 billion
and $381.3 million at December 31, 2007, respectively. Many of our
floating rate debt investments bear interest based on
LIBOR. Investment income for the year ended December 31, 2008
increased despite lower prevailing levels of LIBOR, as fixed rate instruments as
a percentage of our debt investments increased to 53% at December 31, 2008 from
40% at December 31, 2007.
2
Expenses
Net
expenses including taxes for the quarters ended December 31, 2008 and 2007
were $12.1 million and $13.2 million, respectively. Of these totals,
$4.8 million and $5.8 million, respectively, were interest and other credit
facility expenses. Expenses net of performance-based incentive fees and interest
and other credit facility expenses for the quarters ended December 31, 2008 and
2007 were $7.3 million and $7.4 million, respectively.
Net
expenses including taxes for the years ended December 31, 2008 and 2007
were $48.1 million and $51.9 million, respectively. Of these totals,
$18.7 million and $20.3 million, respectively, were interest and other credit
facility expenses. Expenses net of performance-based incentive fees
and interest and other credit facility expenses for the years ended December 31,
2008 and 2007 were $29.4 million and $24.3 million, respectively. Net
expenses for the years ended December 31, 2008 and 2007 were net of base
management fee waivers of zero and $2.1 million, respectively. All
such fee waivers terminated upon the completion of our initial public
offering.
These
net expenses consist of base management fees (net of waivers), professional
fees, administrative services expenses, investment advisor expenses,
amortization of debt issuance costs, insurance expenses, director fees,
miscellaneous other expenses and excise tax expense. The increase in
base management fees for the year ended December 31, 2008 reflects the growth of
the quarterly portfolio values on which the fees are paid (in
arrears). No incentive management fees were incurred during 2008 due
primarily to the increase in unrealized depreciation on
investments. The decrease in interest expense and fees related to the
credit facility in 2008 is a result of reduced borrowing costs from lower
prevailing levels of LIBOR, partially offset by higher average borrowings
outstanding. Professional fees and insurance expenses increased as a
result of our becoming a publicly-traded company in 2007.
Net
Investment Income
Net
investment income totaled $23.0 million and $22.1 million, or $0.42 per share
and $0.43 per share, for the quarters ended December 31, 2008 and 2007,
respectively. For the years ended December 31, 2008 and 2007, net
investment income totaled $95.1 million and $75.8 million, or $1.76 per share
and $1.66 per share, respectively. The increases were primarily due
to portfolio growth and the benefits of leverage from increased borrowings under
our credit facility.
Net
Realized Gain or Loss
Total
net realized gain or loss for the quarters ended December 31, 2008 and 2007 was
a gain of $7.4 million and a loss of ($1.3) million, respectively, and a gain of
$6.1 million and a loss of ($0.6) million for the years ended December 31, 2008
and 2007, respectively. Net realized gains during the 2008 periods
primarily reflect the appreciation of the U.S. dollar relative to the Euro and
Canadian dollar, which resulted in gains on our foreign currency contracts used
to hedge investments denominated in such currencies.
Net
Unrealized Depreciation
The
net change in unrealized depreciation on the Company’s investments and foreign
currency translation was ($134.6) million and ($36.8) million for the quarters
ended December 31, 2008 and 2007, respectively, and ($251.7) million and ($59.0)
million for the years ended December 31, 2008 and 2007,
respectively. Net unrealized depreciation was ($309.3) million and
($57.6) million at December 31, 2008 and 2007, respectively. The net
change in unrealized depreciation for the 2008 periods was a result of a
reduction in multiples used to estimate the fair value of our investments and
the underperformance of some portfolio companies. 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.
3
Net
Change in Net Assets from Operations
For
the quarters ended December 31, 2008 and 2007, the net decrease in net assets
from operations was ($104.1) million and ($15.9) million, or ($1.88) per share
and ($0.31) per share, respectively. For the years ended December 31,
2008 and 2007, the net (decrease) increase in net assets from operations was
($150.5) million and $16.2 million, or ($2.78) per share and $0.35 per share,
respectively. The decreases in net assets from operations since December 31,
2007 primarily reflect the increase in net unrealized depreciation on
investments in excess of net investment income.
Liquidity
and Capital Resources
At
December 31, 2008, we had $15 million in cash and cash equivalents, $426 million
in borrowings outstanding and, subject to leverage restrictions, $119 million
available for use under our $545 million credit facility, which matures in
December 2010. Since December 31, 2008, conditions in the public debt
and equity markets have continued to be volatile and our net asset value may
decline. While these conditions persist, we expect to meet our
liquidity needs through use of the remaining availability under our credit
facility and continued cash flows from operations and investment
sales. The primary use of existing funds is currently expected to be
investments in portfolio companies, cash distributions to our stockholders,
repayment of indebtedness and other general corporate purposes.
In
the future, we may raise additional equity or debt capital off our shelf
registration or may securitize a portion of our investments, among other
considerations. However, we face and expect to continue to face
liquidity constraints under current market conditions, and if such conditions
worsen substantially, we may be unable to raise capital at all.
On
October 23, 2008, our Form N-2 shelf registration statement was declared
effective by the Securities and Exchange Commission (“SEC”), which permits 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.
As
a closed-end investment company regulated as a business development company
under the Investment Company Act of 1940 (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 at a price below the then-current NAV, with the approval of our Board of
Directors. 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.
Certain
institutional shareholders beneficially owned, in the aggregate, approximately
76.9% of the outstanding shares of our common stock at December 31,
2008. The outstanding shares of our common stock owned by such
institutions are eligible for immediate 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 quarters ended December 31, 2008 and 2007 totaled
$23.8 million or $0.43 per share and $22.4 million or $0.43 per share,
respectively. For the years ended December 31, 2008 and 2007,
dividends totaled $92.9 million or $1.72 per share and $77.0 million or $1.69
per share, respectively. Tax characteristics of all dividends will be
reported to stockholders on Form 1099 after the end of the calendar
year.
4
We
have elected to be taxed as a regulated investment company, or RIC, under
Subchapter M of the Internal Revenue Code. To maintain our status as a RIC, 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 currently 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. For the years ended December 31, 2008 and 2007, we recorded
a provision for federal excise taxes of approximately $437,000 and $24,000,
respectively. Excise taxes increased in 2008 due to higher than
expected amounts of fees from investments and realized gains on forward foreign
currency contracts that were not distributed to stockholders in
2008. These amounts, currently estimated to be approximately $13.0
million or $0.23 per share, will be paid out as dividends to stockholders in
2009.
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 applicable to us as a business development company
under 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 RIC. 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 when
received and accordingly, distributed to stockholders. For the quarters ended
December 31, 2008 and 2007, these fees totaled zero and $1.2 million,
respectively. For the years ended December 31, 2008 and 2007, such
fees totaled $2.6 million and $6.5 million, respectively.
A
new tax rule for 2009 permits publicly-traded RICs to distribute stock to
satisfy their taxable income distribution requirements if stated conditions are
met, including that at least 10% of the aggregate declared distribution be paid
in cash and that stockholders be permitted to elect whether to receive cash or
stock subject to the limit set by the RIC on the cash to be distributed in the
aggregate to all stockholders. Our Board of Directors has not yet
made a determination whether to utilize the new rule.
Dividend
Reinvestment and Amended and Restated Dividend Reinvestment Plan
We
maintain an “opt out” dividend reinvestment plan for our common
stockholders. As a result, 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. For the years ended December
31, 2008 and 2007, dividends reinvested pursuant to our dividend reinvestment
plan totaled $28.7 million and $72.9 million, respectively.
Under
the terms of our amended and restated dividend reinvestment plan adopted on
March 4, 2009, dividends may be paid in newly issued or treasury shares of our
common stock at a price equal to 95% of the market price on the dividend payment
date. This feature of the plan means that, under certain
circumstances, we may issue shares of our common stock at a price below net
asset value per share, which could cause our stockholders to experience
dilution. Reinvestment at such prices resulted in dilution of our net
asset value of approximately $0.11 per share for the year ended December 31,
2008.
Share
Repurchase Plan
In
August 2008, our Board of Directors approved a share repurchase plan under which
we may repurchase up to 2.5% of our outstanding shares of common stock from time
to time in open market or privately negotiated transactions. During
the year ended December 31, 2008, we purchased a total of 378,107 shares of our
common stock on the open market for $3.2 million, including brokerage
commissions. We are currently holding the shares we repurchased in
treasury.
5
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 webcast/teleconference call at 4:30 p.m. (Eastern
Time) on Tuesday, March 10, 2009 to discuss its fourth quarter and annual 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 88624429). A live, listen-only
webcast will also be available via the investor relations section of
www.blackrockkelso.com.
Both
the teleconference and webcast will be available for replay by 8:00 p.m. on
Tuesday, March 10, 2009 and ending at midnight on Tuesday, March 17,
2009. 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
88624429. To access the webcast, please visit the investor relations
section of www.blackrockkelso.com.
6
BlackRock
Kelso Capital Corporation
Statements
of Assets and Liabilities
| Assets: |
December 31,
2008
|
December 31,
2007*
|
||||||
| Investments at fair value: | ||||||||
|
Non-controlled,
non-affiliated investments (amortized cost of $1,115,354,825 and
$1,049,585,229)
|
$ | 875,633,291 | $ | 1,018,013,709 | ||||
|
Non-controlled,
affiliated investments (amortized cost of $64,268,941 and
$66,907,657)
|
40,015,080 | 65,412,682 | ||||||
|
Controlled
investments (amortized cost of $56,207,945 and
$38,881,854)
|
11,196,555 | 14,834,395 | ||||||
|
Total
investments at fair value (amortized cost of $1,235,831,711 and
$1,155,374,740)
|
926,844,926 | 1,098,260,786 | ||||||
|
Cash
and cash equivalents
|
15,024,972 | 5,077,695 | ||||||
|
Foreign
currency at fair value (cost of $764,413 and $10,291)
|
761,299 | 10,864 | ||||||
|
Unrealized
appreciation on forward foreign currency contracts
|
717,972 | 121,021 | ||||||
|
Interest
receivable
|
16,300,537 | 14,260,266 | ||||||
|
Dividends
receivable
|
4,161,246 | 1,796,615 | ||||||
|
Prepaid
expenses and other assets
|
2,380,988 | 2,414,954 | ||||||
|
Total
Assets
|
$ | 966,191,940 | $ | 1,121,942,201 | ||||
|
Liabilities:
|
||||||||
|
Payable
for investments purchased
|
$ | 1,005,101 | $ | — | ||||
|
Unrealized
depreciation on forward foreign currency contracts
|
1,054,165 | 572,965 | ||||||
|
Credit
facility payable
|
426,000,000 | 381,300,000 | ||||||
|
Interest
payable on credit facility
|
835,491 | 1,508,277 | ||||||
|
Dividend
distributions payable
|
19,463,166 | 3,310,606 | ||||||
|
Base
management fees payable
|
5,725,029 | 5,606,213 | ||||||
|
Accrued
administrative services
|
170,445 | 361,118 | ||||||
|
Other
accrued expenses and payables
|
1,643,042 | 1,091,153 | ||||||
|
Total
Liabilities
|
455,896,439 | 393,750,332 | ||||||
|
Net
Assets:
|
||||||||
|
Common
stock, par value $.001 per share, 100,000,000 common shares authorized,
55,670,594 and 52,825,109 issued and 55,292,487 and 52,825,109
outstanding
|
55,671 | 52,825 | ||||||
|
Paid-in
capital in excess of par
|
818,627,914 | 790,378,102 | ||||||
|
Undistributed
(distributions in excess of) net investment income
|
3,855,016 | (5,411,353 | ) | |||||
|
Accumulated
net realized gain
|
243,475 | 729,635 | ||||||
|
Net
unrealized depreciation
|
(309,295,567 | ) | (57,557,340 | ) | ||||
|
Treasury
stock at cost, 378,107 and zero shares held
|
(3,191,008 | ) | — | |||||
|
Total
Net Assets
|
510,295,501 | 728,191,869 | ||||||
|
Total
Liabilities and Net Assets
|
$ | 966,191,940 | $ | 1,121,942,201 | ||||
|
Net
Asset Value Per Share
|
$ | 9.23 | $ | 13.78 | ||||
________________
*
Certain amounts have been reclassified to conform to the current year’s
presentation.
7
|
BlackRock
Kelso Capital Corporation
Statements
of Operations
|
Three
months ended
December
31, 2008
|
Three
months ended
December
31, 2007
|
Year
ended
December
31, 2008
|
Year
ended
December
31, 2007
|
||||||||||||
|
Investment
Income:
|
||||||||||||||||
|
From
non-controlled, non-affiliated investments:
|
||||||||||||||||
|
Interest
|
$ | 33,358,785 | $ | 32,809,190 | $ | 134,491,870 | $ | 118,219,979 | ||||||||
|
Dividends
|
502,866 | 355,652 | 1,760,131 | 940,969 | ||||||||||||
|
Other
income
|
148,339 | 20,700 | 166,777 | 55,695 | ||||||||||||
|
From
non-controlled, affiliated investments:
|
||||||||||||||||
|
Interest
|
721,505 | 1,276,088 | 4,246,547 | 3,259,182 | ||||||||||||
|
Dividends
|
268,062 | 537,509 | 1,262,730 | 1,191,434 | ||||||||||||
|
Other
income
|
50,000 | — | 50,000 | 300,000 | ||||||||||||
|
From
controlled investments:
|
||||||||||||||||
|
Interest
and dividends
|
131,991 | 353,308 | 1,217,658 | 3,808,869 | ||||||||||||
|
Total
investment income
|
35,181,548 | 35,352,447 | 143,195,713 | 127,776,128 | ||||||||||||
|
Expenses:
|
||||||||||||||||
|
Base
management fees
|
5,725,029 | 5,606,214 | 22,716,602 | 19,152,889 | ||||||||||||
|
Incentive
management fees
|
— | — | — | 9,412,097 | ||||||||||||
|
Interest
and credit facility fees
|
4,848,573 | 5,801,678 | 18,667,097 | 20,272,906 | ||||||||||||
|
Professional
fees
|
314,143 | 445,745 | 1,775,146 | 1,249,491 | ||||||||||||
|
Administrative
services
|
170,535 | 340,310 | 1,037,712 | 1,144,394 | ||||||||||||
|
Investment
advisor expenses
|
204,985 | 267,941 | 1,027,135 | 876,429 | ||||||||||||
|
Amortization
of debt issuance costs
|
171,967 | 179,918 | 654,460 | 387,706 | ||||||||||||
|
Insurance
|
139,203 | 139,095 | 535,420 | 341,016 | ||||||||||||
|
Director
fees
|
11,649 | 147,525 | 286,834 | 399,385 | ||||||||||||
|
Other
|
115,220 | 282,382 | 955,585 | 726,914 | ||||||||||||
|
Expenses before management fee waiver
|
11,701,304 | 13,210,808 | 47,655,991 | 53,963,227 | ||||||||||||
|
Base management fee waiver
|
— | — | — | (2,056,906 | ) | |||||||||||
|
Net
expenses
|
11,701,304 | 13,210,808 | 47,655,991 | 51,906,321 | ||||||||||||
|
Net
investment income before excise taxes
|
23,480,244 | 22,141,639 | 95,539,722 | 75,869,807 | ||||||||||||
|
Excise
tax
expense
|
(436,733 | ) | (24,035 | ) | (436,733 | ) | (24,035 | ) | ||||||||
|
Net
Investment
Income
|
23,043,511 | 22,117,604 | 95,102,989 | 75,845,772 | ||||||||||||
|
Realized
and Unrealized Gain (Loss):
|
||||||||||||||||
|
Net
realized gain (loss):
|
||||||||||||||||
|
Non-controlled,
non-affiliated investments
|
(168,876 | ) | (13,023 | ) | 145,474 | 1,516,109 | ||||||||||
|
Non-controlled,
affiliated investments
|
— | 107,007 | 112,783 | 107,007 | ||||||||||||
|
Foreign
currency
|
7,580,460 | (1,344,917 | ) | 5,869,599 | (2,268,909 | ) | ||||||||||
|
Net
realized gain (loss)
|
7,411,584 | (1,250,933 | ) | 6,127,856 | (645,793 | ) | ||||||||||
|
Net
change in unrealized appreciation or depreciation on:
|
||||||||||||||||
|
Non-controlled,
non-affiliated investments
|
(113,634,154 | ) | (19,119,450 | ) | (208,150,014 | ) | (33,457,861 | ) | ||||||||
|
Non-controlled,
affiliated investments
|
(14,792,839 | ) | (5,380,497 | ) | (22,758,886 | ) | (1,494,975 | ) | ||||||||
|
Controlled
investments
|
(2,544,260 | ) | (13,254,496 | ) | (20,963,931 | ) | (24,047,459 | ) | ||||||||
|
Foreign
currency translation
|
(3,583,526 | ) | 989,854 | 134,604 | 19,681 | |||||||||||
|
Net
change in unrealized appreciation or depreciation
|
(134,554,779 | ) | (36,764,589 | ) | (251,738,227 | ) | (58,980,614 | ) | ||||||||
|
Net
realized and unrealized gain (loss)
|
(127,143,195 | ) | (38,015,522 | ) | (245,610,371 | ) | (59,626,407 | ) | ||||||||
|
Net
Increase (Decrease) in Net Assets Resulting from Operations
|
$ | (104,099,684 | ) | $ | (15,897,918 | ) | $ | (150,507,382 | ) | $ | 16,219,365 | |||||
|
Net
Investment Income Per Share
|
$ | 0.42 | $ | 0.43 | $ | 1.76 | $ | 1.66 | ||||||||
|
Earnings
(Loss) Per Share
|
$ | (1.88 | ) | $ | (0.31 | ) | $ | (2.78 | ) | $ | 0.35 | |||||
|
Basic
and Diluted Weighted-Average Shares Outstanding
|
55,398,258 | 51,987,529 | 54,043,069 | 45,714,141 | ||||||||||||
8
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, 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 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, 2008 to be filed with the SEC identifies additional factors that
can affect forward-looking statements.
Available
Information
BlackRock
Kelso Capital will make available on its website its Annual Report on Form 10-K,
which also serves as its annual report to stockholders. The Company intends to
file its Annual Report on Form 10-K with the SEC by no later than March 16, 2009
and stockholders may access the report after it is filed at www.blackrockkelso.com.
Stockholders may receive a hard copy of the annual report free of charge by
submitting a written request to the Company.
# # #
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9
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