November 8, 2006
Securities and Exchange Commission
Attn: Filing Desk, Stop 1-4
450 Fifth Street, N.W
Washington, DC 20549
RE: Rule 17f-2
BlackRock Kelso Capital Corporation
Registration No. 000-51327, CIK No. 0001326003
Ladies and Gentlemen:
On behalf of our client, BLACKROCK KELSO CAPITAL CORPORATION, we are filing
electronically one copy of the EDGARized version of our examination report dated
September 11, 2006, submitted pursuant to the requirements of subsections (b)
and (c) of Rule 17f-2 under the Investment Company Act of 1940 as of July 31,
2006.
Yours truly,
Tim Mundy
Partner
Enclosure
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of BlackRock Kelso Capital Corporation:
We have examined management's assertion included in the accompanying Management
Statement Regarding Compliance with Certain Provisions of the Investment Company
Act of 1940 that BlackRock Kelso Capital Corporation (the "Company") complied
with the requirements of subsections (b) and (c) of Rule 17f-2 under the
Investment Company Act of 1940 ("the Act") as of July 31, 2006. Management is
responsible for the Company's compliance with those requirements. Our
responsibility is to express an opinion on management's assertion about the
Company's compliance based on our examination.
Our examination was conducted in accordance with attestation standards
established by the American Institute of Certified Public Accountants, as
adopted by the Public Company Accounting Oversight Board (United States), and,
accordingly, included examining, on a test basis, evidence about the Company's
compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. Included among our procedures were
the following tests performed as of July 31, 2006, and with respect to agreement
of security purchases and sales, for the period from April 30, 2006 (the date of
the last examination) through July 31, 2006:
o Confirmation of all securities held by institutions in book entry form
for the account of PNC Bank, on behalf of PFPC Trust Company (the
"Custodian" of the Company), by The Depository Trust Company and The
Federal Reserve System;
o Confirmation of all securities hypothecated, pledged, placed in
escrow, or out for transfer with brokers, pledgees and/or transfer
agents;
o Reconciliation of all such securities to the books and records of the
Company and the Custodian; and
o Agreement of one security purchase and one security sale or maturity
since our last report from the books and records of the Company to
broker confirmations.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Company's compliance
with specified requirements.
In our opinion, management's assertion that the Company complied with the
requirements of subsections (b) and (c) of Rule 17f-2 of the Investment Company
Act of 1940 as of July 31, 2006 with respect to securities reflected in the
investment account of the Company is fairly stated, in all material respects.
This report is intended solely for the information and use of management and the
Board of Directors of the Company, the Company's investment advisor and the
Securities and Exchange Commission and is not intended to be and should not be
used by anyone other than these specified parties.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
September 11, 2006
Deloitte & Touche
1700 Market Street
Philadelphia, PA 19103
Attn: Reese Blair
MANAGEMENT STATEMENT REGARDING COMPLIANCE WITH RULE 17F-2 UNDER THE INVESTMENT
COMPANY ACT OF 1940
We, as officers of BlackRock Kelso Capital Corporation (the "Company"), are
responsible for complying with the requirements of subsections (b) and (c) of
Rule 17f-2, "Custody of Investments by Registered Management Investment
Companies," under the Investment Company Act of 1940. We are also responsible
for establishing and maintaining effective internal controls over compliance
with those requirements. We have performed an evaluation of the Company's
compliance with the requirements of subsections (b) and (c) of Rule 17f-2 as of
July 31, 2006, and from April 30, 2006 (the date of the last examination)
through July 31, 2006.
Based on this evaluation, we assert that the Company was in compliance with the
requirements of subsections (b) and (c) of Rule 17f-2 under the Investment
Company Act of 1940 as of July 31, 2006, and from April 30, 2006 (the date of
the last examination), through July 31, 2006, with respect to securities
reflected in the investment account of the Company.
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James R. Maher, Chief Executive Officer
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Frank D. Gordon, Chief Financial Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-17f-2
Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
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1. Investment Company Act File Number: Date examination completed:
000-51327 JULY 31, 2006
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2. State identification Number:
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AL AK AZ AR CA CO
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CT DE DC FL GA HI
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ID IL IN IA KS KY
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LA ME MD MA MI MN
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MS MO MT NE NV NH
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NJ NM NY NC ND OH
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OK OR PA RI SC SD
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TN TX UT VT VA WA
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WV WI WY PUERTO RICO
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Other (specify):
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3. Exact name of investment company as specified in registration statement: BLACKROCK KELSO CAPITAL CORPORATION
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4. Address of principal executive officer (number, street, city, state, zip code):
40 East 52nd Street, New York, NY 10022