BlackRock Capital Investment Corporation Reports Financial Results for the Quarter and Year Ended December 31, 2018, Declares Quarterly Distribution of $0.18 per Share

  • GAAP Net Investment Income (NII) of $0.17 per share providing fourth
    quarter distribution coverage of approximately 94%
  • Net Asset Value (NAV) per share declined 7.7% or $0.59 per share to
    $7.07 per share on a quarter-over-quarter basis primarily due to net
    unrealized depreciation on certain legacy assets
  • Net leverage of 0.36x was down reflecting a net reduction in
    investments. Total liquidity for portfolio company investments,
    including cash, was approximately $252 million, subject to leverage
    and borrowing base restrictions
  • Waiver of incentive management fees based on income extended until
    June 30, 2019
  • Under our existing share repurchase program, we repurchased 1,986,014
    shares of common stock for $11.2 million at an average price of $5.62,
    including brokerage commissions, via open market purchases in the
    fourth quarter.

NEW YORK–(BUSINESS WIRE)–BlackRock Capital Investment Corporation (NASDAQ:BKCC) (“BCIC” or the
“Company,” “we,” “us” or “our”) announced today that its Board of
Directors declared a quarterly distribution of $0.18 per share, payable
on April 8, 2019 to stockholders of record at the close of business on
March 18, 2019.

“We continued to execute upon our disciplined deployment strategy in the
fourth quarter. Our net unrealized and realized losses of $46 million
(or $0.66 per share) were largely concentrated in certain equity or
equity-like legacy investments. Our investment in US Well alone resulted
in $20 million of unrealized loss. In connection with the November 2018
merger of US Well with a publicly traded entity (Nasdaq: USWS), our
legacy equity in US Well was converted into publicly traded shares of
USWS. The quarter-end valuation reflected the December 31, 2018 USWS
closing price of $6.50, subject to additional discounts for lock-up
periods. The stock price of USWS has increased during Q1 2019 to-date
and we anticipate that the valuation of our investment will continue to
shift in-line with the quarter-end closing prices of the USWS stock. As
the broad equity markets declined towards the end of the fourth quarter,
the comparable multiples used in valuing some of the other investments
also declined, contributing significantly to reduced valuations. We
continue to work towards monetizing and exiting certain non-income
producing legacy assets in our portfolio. We are seeking to create sales
or natural exits of these assets in a manner that we believe to be in
the best interest of our stockholders. We believe that exiting these
positions will be accretive to our Net Investment Income and reduce the
volatility in our portfolio valuation” commented James E. Keenan,
Chairman and Interim CEO of BlackRock Capital Investment Corporation.

“The Company has now started to benefit from increased deal flow and
added industry-specific expertise following the acquisition last year of
Tennenbaum Capital Partners, or TCP, by the Company’s adviser, BlackRock
Capital Investment Advisors, LLC. The investment teams and investment
processes for the Company and TCP affiliated funds have been integrated,
and we believe that this will help add value for the Company’s
stockholders. As part of this integration, we are pleased to announce
that Howard Levkowitz and Raj Vig, former managing partners of TCP, have
joined the investment committee that supports the Company. As voting
members, they bring vast experience and expertise in direct lending.
Subsequent to the quarter-ended December 31, 2018, we have begun to
co-invest with TCP affiliated funds, and we expect the frequency of
co-investments to increase going forward. Additionally, we believe that
a benefit of our ability to co-invest with TCP affiliated funds is to
mitigate portfolio risk by increasing issuer and sector diversity.

“Under BlackRock’s management of BCIC, from March 6, 2015 to December
31, 2018, we have deployed approximately $962 million of capital, of
which $362 million has been exited with a realized IRR of 14.0%. Under
our existing share repurchase program, during the fourth quarter, we
invested approximately $11.2 million in share repurchases at an average
price of $5.62 per share. With liquidity at $252 million and no debt
maturities until 2022, we have significant operating flexibility and
deployment capacity.”

Financial Highlights

    Q4 2018     Q3 2018     Q4 2017  
Total   Per   Total   Per   Total   Per
($’s in millions, except per share data)     Amount     Share     Amount     Share     Amount     Share  
 
Net Investment Income/(loss) $ 11.8 $ 0.17 $ 12.5 $ 0.18 $ 14.5 $ 0.20
Net realized and unrealized gains/(losses) $ (46.4 ) $ (0.66 ) $ 7.9 $ 0.11 $ (16.4 ) $ (0.22 )
Deferred taxes $ 2.2 $ 0.03 $ (0.4 ) $ (0.01 ) $ 5.3 $ 0.07
Realized losses on extinguishment of debt
Basic earnings/(losses) $ (32.4 ) $ (0.46 ) $ 20.0 $ 0.28 $ 3.3 $ 0.05
Distributions declared $ 12.6 $ 0.18 $ 12.8 $ 0.18 $ 13.2 $ 0.18
Net Investment Income/(loss), as adjusted1 $ 11.8 $ 0.17 $ 12.5 $ 0.18 $ 14.5 $ 0.20

Basic earnings/(losses), as adjusted1

    $ (32.4 )   $ (0.46 )   $ 20.0     $ 0.28     $ 3.3     $ 0.05  
     
  2018 Totals       2017 Totals  
Total     Per Total     Per
($’s in millions, except per share data)   Amount       Share       Amount       Share  
 
Net Investment Income/(loss) $ 47.4 $ 0.66 $ 55.1 $ 0.75
Net realized and unrealized gains/(losses) $ (56.6 ) $ (0.79 ) $ (32.9 ) $ (0.44 )
Realized losses on extinguishment of debt $ (1.3 ) $ (0.02 )
Basic earnings/(loss) $ (9.2 ) $ (0.13 ) $ 20.9 $ 0.29
Distributions declared $ 51.3 $ 0.72 $ 52.5 $ 0.72
 
Net Investment Income/(loss), as adjusted1 $ 47.4 $ 0.66 $ 55.1 $ 0.75
Basic earnings/(loss), as adjusted1   $ (9.2 )     $ (0.13 )     $ 20.9       $ 0.29  
               
As of As of As of
December 31, September 30, December 31,
($’s in millions, except per share data)     2018       2018       2017
 
Total assets $ 693.6 $ 799.5 $ 799.9
Investment portfolio, at fair market value $ 671.7 $ 780.6 $ 757.9
Debt outstanding $ 186.4 $ 233.0 $ 206.7
Total net assets $ 487.0 $ 543.2 $ 571.1
Net asset value per share $ 7.07 $ 7.66 $ 7.83

Net leverage ratio2

    0.36x       0.43x       0.32x
 

_____________________

1   Non-GAAP basis financial measure. See Supplemental Information on
page 8.
2 Calculated as the ratio between (A) debt, excluding unamortized debt
issuance costs, less available cash and receivable for investments
sold, and (B) net asset value.
 

Business Updates

  • Under our existing share repurchase program, during the fourth quarter
    of 2018, 1,986,014 shares were repurchased for $11.2 million at an
    average price of $5.62 per share, including brokerage commissions. The
    cumulative repurchases since BlackRock entered into the investment
    management agreement with the Company in early 2015 totaled
    approximately 7.2 million shares for $49.9 million, representing 80.3%
    of total share repurchase activity, on a dollar basis, since
    inception. Since the inception of our share repurchase program through
    December 31, 2018, we have purchased 8.9 million shares at an average
    price of $6.96 per share, including brokerage commissions, for a total
    of $62.2 million. In April 2018, our Board of Directors authorized an
    additional 2.5 million shares for repurchase, effective July 1, 2018
    until the earlier of June 30, 2019 or until such time that all of the
    authorized shares have been repurchased. Furthermore, in October 2018,
    an additional 3 million shares were authorized for repurchases,
    effective November 5, 2018 until the earlier of October 28, 2019 or
    until such time that all of the authorized shares have been
    repurchased.
  • The non-core legacy asset book comprised 33% of our total portfolio by
    fair market value as of December 31, 2018. This is further broken down
    into income-producing investments, non-earning equities and
    non-accrual investments at 25%, 7% and 1% of the total portfolio,
    respectively by fair market value. Our investments in Vertellus
    Holdings, AGY Holding, Sur La Table, US Well Services and related
    issuers comprise 73% of the non-core book by fair market value.
  • Waiver of our incentive management fee based on income, which
    previously ran through December 31, 2018, has been extended to June
    30, 2019.

Portfolio and Investment Activity*

    Three months     Three months        
($’s in millions) ended ended Year ended Year ended
December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017
Investment deployments $ 32.0 $ 63.3 $ 308.6 $ 243.4
Investment exits $ 94.7 $ 124.3 $ 338.4 $ 386.4
Number of portfolio company investments at the end of period 27 30

Weighted average yield of debt and income producing
equity
securities, at fair market value

11.5 % 10.8 %
% of Portfolio invested in Secured debt, at fair market value 47 % 56 %
% of Portfolio invested in Unsecured debt, at fair market value 23 % 17 %
% of Portfolio invested in Equity, at fair market value 30 % 27 %

Average investment by portfolio company, at amortized cost
(excluding
investments below $5.0 million)

                      $ 34.1         $ 33.0  
*balance sheet amounts above are as of period end
 
  • We deployed $32.0 million during the quarter while exits of
    investments totaled $94.7 million, resulting in a $62.7 million net
    decrease in our portfolio due to investment activity.

    • Our deployments were primarily concentrated in one new portfolio
      company investment and two investments into existing portfolio
      companies.

      • $15.0 million funded L+7.50% second lien term loan to Outcomes
        Group Holdings, which is a specialized care management
        provider in the workers’ compensation industry;
      • $11.9 million of incremental L + 11.0% unsecured debt as well
        as $0.4 million of preferred stock at 13.5% to Gordon Brothers
        Finance Company (“GBFC”) to fund portfolio growth; and
      • $2.5 million of incremental L + 6.00% first lien delayed draw
        term loan to United PF Holdings, LLC.
    • Our repayments were primarily concentrated in two portfolio
      company exits, two position exits, and one partial repayment:

      • $19.0 million and $8.2 million repayments of Pathway Partners
        Vet Management Company, LLC second lien term loan and second
        lien delayed draw term loan, respectively;
      • $12.9 million repayment of K2 Pure Solutions Nocal, LP first
        lien term loan;
      • $31.2 million and $7.9 million cash repayments of U.S. Well
        Services, LLC first lien term loan and revolver, respectively;
        and
      • $15.0 million partial repayment of unsecured debt to GBFC.
  • Our $96.3 million equity investment in Senior Loan Partners is
    generating a yield of approximately 11%. During the fourth quarter,
    Senior Loan Partners made investments into four new portfolio
    companies and four existing portfolio companies totaling $57.5 million
    of new capital deployments during the quarter. Total committed capital
    and outstanding investments, at par, amounted to $363.5 million and
    $343.6 million, respectively, to 27 borrowers. The four new
    investments at par were (i) a $12.0 million first lien term loan to
    Achilles Acquisition, LLC, a national employee benefits agency
    specializing in insurance for small-to-medium sized businesses, (ii) a
    $10.0 million first lien term loan to NGS US Finco, LLC, an operation
    and maintenance provider of natural gas transmission networks in the
    US, (iii) an $8.9 million first lien term loan to F.M.I. Intermediate
    Holdings, LLC, a vertically integrated provider of flight critical,
    complex structural assemblies and related manufacturing services for
    global commercial, military and business aircraft, and (iv) a $8.0
    million first lien term loan and a $2.0 million unfunded delayed draw
    term loan to TLE Holdings, LLC, a developer of care and early
    education programs throughout the US. Incremental investments to
    existing portfolio companies primarily included (i) an additional $8.5
    million investment Crown Paper Group Inc., and (ii) an additional $8.6
    million investment in Digital Room, LLC.
  • As of December 31, 2018, there were three non-accrual investment
    positions, representing approximately 1.6% and 7.1% of total debt and
    preferred stock investments, at fair value and cost, respectively, as
    compared to non-accrual investment positions of approximately 3.6% and
    14.3% of total debt and preferred stock investments at fair value and
    cost, respectively, at December 31, 2017. Our average internal
    investment rating at fair market value at December 31, 2018 was 1.44
    as compared to 1.31 as of the prior quarter end.
  • During the quarter ended December 31, 2018, net realized and
    unrealized losses before tax were $(46.4) million, primarily due to
    depreciation in portfolio valuations during the quarter. For the three
    months ended December 31, 2018, unrealized gains in a consolidated
    taxable subsidiary resulted in a decrease to our deferred tax
    liability of $2.2 million.

Fourth Quarter Financial Updates

  • GAAP net investment income (“NII”) was $11.8 million, or $0.17 per
    share, and $47.4 million, or $0.66 per share, respectively, for the
    three months and year ended December 31, 2018. Relative to
    distributions declared of $0.18 per share, our NII distribution
    coverage was 94% for the quarter. For the full year 2018, relative to
    distributions declared of $0.72 per share, our NII distribution
    coverage was 93%.
  • As previously disclosed, our base management fee rate was reduced from
    an annual rate of 2.00% of total assets to 1.75% effective March 7,
    2017. For the year ended December 31, 2018, $8.5 million of incentive
    management fees based on income were earned by our investment adviser;
    however, as previously disclosed, any such fees earned until December
    31, 2018 were waived by our investment adviser. This waiver has now
    been extended to June 30, 2019. Pursuant to the waiver, $16.5 million
    of incentive management fees have been waived on a cumulative basis.
    During the year, there was no accrual for incentive management fees
    based on gains.
  • The Company holds certain portfolio investments through taxable
    subsidiaries as pass through entities. Income earned and gains
    realized on the investment held by the taxable subsidiary are taxable
    to such subsidiary. For the three months ended December 31, 2018, a
    reversal of a deferred tax liability of $2.2 million was included in
    net realized and unrealized gain (loss), primarily due to a
    depreciation in valuations on the portfolio investments held in a
    taxable subsidiary. For the year ended December 31, 2018, deferred tax
    had no impact to the Consolidated Statement of Operations.
  • Tax characteristics of all 2018 distributions were reported to
    stockholders on Form 1099 after the end of the calendar year. Our 2018
    distributions of $0.72 per share were comprised of $0.70 per share
    from various sources of income and $0.02 per share of return of
    capital. Our return of capital distributions totaled $1.98 per share
    from inception to December 31, 2018. At our discretion, we may 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 undistributed taxable income as required. There was no
    undistributed taxable income carried forward from 2018.

Liquidity and Capital Resources

  • At December 31, 2018, we had $13.5 million in cash and cash
    equivalents and $238.6 million of availability under our credit
    facility, subject to leverage restrictions, resulting in approximately
    $252.1 million of availability for portfolio company investments.
  • Net leverage, adjusted for available cash, receivables for investments
    sold, payables for investments purchased and unamortized debt issuance
    costs, stood at 0.36x at quarter-end, and our 354% asset coverage
    ratio provided the Company with available debt capacity under its
    asset coverage requirements of $293.4 million. Further, as of
    quarter-end, approximately 78% of our portfolio was invested in
    qualifying assets, exceeding the 70% regulatory requirement of a
    business development company.

Conference Call

BlackRock Capital Investment Corporation will host a
webcast/teleconference at 10:00 a.m. (Eastern Time) on Thursday, March
7, 2019, to discuss its fourth quarter 2018 financial results. All
interested parties are welcome to participate. You can access the
teleconference by dialing, from the United States, (888) 254-3590, or
from outside the United States, +1-323-994-2093, 10 minutes before 10:00
a.m. and referencing the BlackRock Capital Investment Corporation
Conference Call (ID Number 1729257). A live, listen-only webcast will
also be available via the Investor Relations section of www.blackrockbkcc.com.
Both the teleconference and webcast will be available for replay by 1:00
p.m. on Thursday, March 7, 2019 and ending at 1:00 p.m. on Thursday,
March 21, 2019. To access the replay of the teleconference, callers from
the United States should dial (888) 203-1112 and callers from outside
the United States should dial (719) 457-0820 and enter the Conference ID
Number 1729257.

Prior to the webcast/teleconference, an investor presentation that
complements the earnings conference call will be posted to BlackRock
Capital Investment Corporation’s website within the Presentations
section of the Investors page (http://www.blackrockbkcc.com/news-and-events/disclaimer).

About BlackRock Capital Investment Corporation

BlackRock Capital Investment Corporation is a business development
company that provides 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.

BlackRock Capital Investment Corporation

Consolidated Statements of Assets and Liabilities

       
        December 31,

2018

      December 31,

2017

Assets
Investments at fair value:
Non-controlled, non-affiliated investments (cost of $233,331,450 and
$311,938,762)
$ 200,569,644 $ 261,683,202
Non-controlled, affiliated investments (cost of $130,892,674 and
$195,354,637)
111,727,234 215,779,077
Controlled investments (cost of $388,870,375 and $321,999,526)   359,356,068     280,478,528
Total investments at fair value (cost of $753,094,499 and
$829,292,925)
671,652,946 757,940,807
Cash and cash equivalents 13,497,320 29,014,645
Receivable for investments sold 1,691,077 1,344,918
Interest, dividends and fees receivable 4,084,001 8,342,780
Prepaid expenses and other assets   2,707,036     3,236,819
Total Assets $ 693,632,380   $ 799,879,969
Liabilities
Debt (net of deferred financing costs of $3,227,965 and $4,209,445) $ 186,397,728 $ 206,661,272
Interest and credit facility fees payable 722,841 1,820,971
Distributions payable 12,552,212 13,152,924
Base management fees payable 3,494,520 3,734,655
Payable for investments purchased 989,460 479,297
Accrued administrative services 376,507 114,995
Other accrued expenses and payables   2,078,958     2,815,923
Total Liabilities   206,612,226     228,780,037
Net Assets

Common stock, par value $.001 per share, 200,000,000 common shares
  authorized,
77,861,287 and 77,723,764 issued and 68,921,798 and 72,946,910
  outstanding

77,861 77,723
Paid-in capital in excess of par 853,248,794 858,087,822
Distributable earnings (losses) (304,106,473) (249,331,111)
Treasury stock at cost, 8,939,489 and 4,776,854 shares held   (62,200,028)     (37,734,502)
Total Net Assets   487,020,154     571,099,932
Total Liabilities and Net Assets $ 693,632,380   $ 799,879,969
Net Asset Value Per Share     $ 7.07     $ 7.83
 

BlackRock Capital Investment Corporation

Consolidated Statements of Operations

               
Three Three
months months
Ended ended
12/31/18 12/31/17 Year ended Year ended
      (Unaudited)       (Unaudited)       12/31/18       12/31/17  
Investment Income:
Non-controlled, non-affiliated investments:
Cash interest income $ 6,458,180 $ 9,751,698 $ 28,138,255 $ 42,597,334
PIK interest income 231,517 202,494 516,904 3,340,360
Cash dividend income 404,780
PIK dividend income 65,944
Fee income   366,042         2,708,371         1,428,852         3,213,513  
Total investment income from non-controlled, non-affiliated
investments
  7,055,739         12,662,563         30,084,011         49,621,931  
Non-controlled, affiliated investments:
Cash interest income 1,937,189 2,954,495 9,401,715 10,540,239
PIK interest income 374,151 986,653 1,784,118 4,054,626
PIK dividend income 254,555 917,861 827,934 2,997,385
Fee income         156,716         35,000         506,632  
Total investment income from non-controlled, affiliated investments   2,565,895         5,015,725         12,048,767         18,098,882  
Controlled investments:
Cash interest income 7,064,876 4,119,450 24,490,257 18,714,928
PIK interest income 143,484 1,474,466 1,463,401
Cash dividend income 3,968,845 2,456,399 14,264,703 8,814,639
PIK dividend income 731,516
Fee income   13,855               725,643         25,000  
Total investment income from controlled investments   11,047,576         6,719,333         41,686,585         29,017,968  
Other income   48,231               48,231         590,429  
Total investment income   20,717,441         24,397,621         83,867,594         97,329,210  
Expenses:
Base management fees 3,494,520 3,734,655 14,138,788 16,391,532
Incentive management fees 2,356,899 2,903,436 8,510,866 7,980,098
Interest and credit facility fees 3,786,153 4,149,211 15,228,062 18,205,912
Professional fees 864,500 1,026,921 2,428,850 2,708,262
Administrative services 376,507 114,995 1,702,723 1,039,221
Director fees 181,000 193,250 727,000 668,500
Investment advisor expenses 87,500 87,500 350,000 350,004
Other   142,768         573,908         1,860,696         2,874,087  
Total expenses, before incentive management fee waiver 11,289,847 12,783,876 44,946,985 50,217,616
Incentive management fee waiver   (2,356,899 )       (2,903,436 )       (8,510,866 )       (7,980,098 )
Expenses, net of incentive management fee waiver   8,932,948         9,880,440         36,436,119         42,237,518  
Net Investment Income   11,784,493         14,517,181         47,431,475         55,091,692  
 
Realized and Unrealized Gain (Loss):
Net realized gain (loss):
Non-controlled, non-affiliated investments 3,237 (859,750 ) (46,104,588 ) (54,814,358 )
Non-controlled, affiliated investments 28,550,295 28,550,295
Controlled investments   375,000               (28,384,662 )       2,375,534  
Net realized gain (loss)   28,928,532         (859,750 )       (45,938,955 )       (52,438,824 )
Net change in unrealized appreciation (depreciation) on:
Non-controlled, non-affiliated investments (6,923,226 ) (8,065,434 ) 17,493,755 23,612,802
Non-controlled, affiliated investments (52,063,236 ) 346,794 (35,110,643 ) 23,722,730
Controlled investments (16,012,774 ) (7,814,577 ) 7,527,453 (28,225,914 )
Foreign currency translation   (356,834 )       (23,380 )       (565,247 )       463,413  
Net change in unrealized appreciation (depreciation)   (75,356,070 )       (15,556,597 )       (10,654,682 )       19,573,031  
Deferred Taxes   2,220,156         5,257,916              
Net realized and unrealized gain (loss)   (44,207,382 )       (11,158,431 )       (56,593,637 )       (32,865,793 )
Realized losses on extinguishment of debt         (10,723 )             (1,323,442 )
Net Increase (Decrease) in Net Assets Resulting from Operations $ (32,422,889 )     $ 3,348,027       $ (9,162,162 )     $ 20,902,457  
Net Investment Income Per Share—basic $ 0.17       $ 0.20       $ 0.66       $ 0.75  
Earnings (Loss) Per Share—basic $ (0.46 )     $ 0.05       $ (0.13 )     $ 0.29  
Average Shares Outstanding—basic   69,835,855         73,145,321         71,373,570         72,983,354  
Net Investment Income Per Share—diluted $ 0.16       $ 0.19       $ 0.64       $ 0.73  
Earnings (Loss) Per Share—diluted $ (0.46 )     $ 0.05       $ (0.13 )     $ 0.29  
Average Shares Outstanding—diluted (NII only)   86,829,592         94,875,804         88,367,307         90,927,689  
Distributions Declared Per Share     $ 0.18       $ 0.18       $ 0.72       $ 0.72  
 

Contacts

Investor Contact:
Nik Singhal
212.810.5427

Press
Contact:

Brian Beades
212.810.5596

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