BlackRock Capital Investment Corporation Reports Financial Results for the Quarter Ended September 30, 2023, Declares Quarterly Cash Dividend of $0.10 per Share

• GAAP Net Investment Income (“NII”) was $9.5 million, or $0.13 per share, in the third quarter, a 7% increase from the second quarter, and a 24% year-over-year increase from the third quarter of 2022. Third quarter NII provided dividend coverage of 131% on a GAAP basis, an increase from prior quarter dividend coverage of 123% and up from 105% coverage in the third quarter of 2022.
• Net Asset Value (“NAV”) increased to $317.6 million as of September 30, 2023, up 1% from $314.0 million as of June 30, 2023, driven by $2.3 million of NII in excess of the declared dividend and $1.3 million of net realized and unrealized gains on the portfolio during the quarter. NAV per share increased to $4.38 per share from $4.33 per share as of June 30, 2023.
• Gross deployments during the third quarter totaled $40.3 million, substantially all of which were in first lien loans. The weighted average yield on gross deployments during the quarter was 13.4%, up from 12.1% in the prior quarter. Gross repayments during the quarter were $43.6 million. The Company held 120 total portfolio companies at quarter-end.
• The Company’s weighted-average portfolio yield as of September 30, 2023 was 12.8% based on total portfolio fair value, consistent with the second quarter.
• Net leverage was 0.84x as of September 30, 2023, down slightly from 0.86x as of June 30, 2023, driven by net repayments of our credit facility during the quarter. Total available liquidity at quarter-end, including borrowing capacity and cash on hand, was $89.8 million, subject to leverage and borrowing base restrictions.
• On September 6, 2023, the Company amended its credit facility which, among other terms, (i) extended the maturity of the loans made under the credit facility to September 2028 and (ii) reduced the applicable interest rate margin by 25 basis points per annum.
• As previously disclosed, on September 6, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with BlackRock TCP Capital Corp. (“TCPC”), pursuant to which the Company will merge with and into a wholly owned, indirect subsidiary of TCPC ("Merger Sub"), subject to stockholder approval, customary regulatory approvals and other closing conditions. Following the merger, TCPC will continue to trade on the Nasdaq Global Select Market under the ticker symbol “TCPC” and Merger Sub will continue as a subsidiary of TCPC.

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 dividend of $0.10 per share, payable on January 8, 2024 to stockholders of record at the close of business on December 15, 2023.

“We are pleased to report a continued increase in our NII this quarter which provided a healthy 131% coverage of our dividend. This marked the tenth successive quarter of increasing dividend coverage. With a relatively modest leverage ratio of 0.84x, we have the flexibility to identify compelling investment opportunities, prudently grow our portfolio and continue to increase our earnings power. The portfolio now represents a well-diversified pool of income producing assets with first lien loans comprising 85% of the investments by fair market value,” said James E. Keenan, Chairman and Interim CEO of the Company. “We ended the quarter with a well-diversified portfolio of 120 companies, more than double the number of portfolio companies we held at the end of 2020."

“With the successful transformation of the Company’s portfolio behind us, our NAV has demonstrated increased stability this year with the NAV per share at the end of the third quarter roughly flat with the NAV per share at the end of 2022. We believe this is a direct consequence of transitioning into a first-lien oriented portfolio. Against the macroeconomic backdrop of continued inflation, higher interest rates, and softening consumer demand, we remain conservative in underwriting new investments and vigilant in monitoring our existing portfolio. We believe we are well positioned to withstand the impact of a deteriorating economic environment,” Mr. Keenan added.

“Additionally, we are excited to have recently announced the proposed merger between BlackRock Capital Investment Corporation and BlackRock TCP Capital Corp. We believe that this is an opportune time to combine our companies. With BCIC having successfully transformed its portfolio, the investment portfolios of the companies are now closely aligned. We believe this transaction positions the combined company for sustained growth and would create meaningful value for the stockholders of BCIC, including opportunities to benefit from more efficient access to capital, the potential for improved trading dynamics, combined operating efficiencies, and a base management fee reduction that has been proposed in conjunction with a successful closing of the transaction. This merger is a strategic next step in the growth and evolution of BlackRock's business development company platform,” Mr. Keenan concluded.

Financial Highlights

Business Updates

• Merger Agreement: As previously disclosed, on September 6, 2023, the Company entered into a Merger Agreement with TCPC, a Delaware corporation, BCIC Merger Sub, LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of TCPC (formerly known as Project Spurs Merger Sub, LLC, “Merger Sub”), and, solely for the limited purposes set forth therein, (x) Tennenbaum Capital Partners, LLC ("TCP"), a Delaware limited liability company and investment advisor to TCPC, and (y) BlackRock Capital Investment Advisors, LLC, the investment advisor to the Company. The Company’s Board of Directors and TCPC's Board of Directors, including all of the independent directors of each board, on the recommendation of a special committee comprised solely of the independent directors of each respective board, have approved the Merger Agreement and the terms and transactions contemplated thereby. For more information, please refer to the Form 8-K as filed with the Securities and Exchange Commission (the “SEC”) on September 6, 2023.
  
  On October 6, 2023, TCPC filed a preliminary registration statement on Form N-14, which included a joint proxy statement of TCPC and BCIC, and TCPC’s prospectus. The registration statement on Form N-14 is subject to review by the SEC. Once the registration statement on Form N-14 is declared effective, TCPC will file its final joint proxy statement/prospectus with the SEC and TCPC and the Company will begin mailing proxies to their respective stockholders. The transaction is subject to approval by TCPC’s and BCIC’s stockholders, customary regulatory approvals and other closing conditions. Assuming these conditions are satisfied, the transaction is expected to close in the first calendar quarter of 2024. For more information, please refer to the Form 8-K as filed with the SEC on September 6, 2023 and the joint proxy statement on Form N-14, filed by TCPC with the SEC on October 6, 2023.
  
  In connection with entry into the Merger Agreement and subject to closing of the merger, TCP has agreed to reduce its base management fee rate for the combined company from 1.50% to 1.25% on assets equal to or below 200% of the net asset value of the combined company (for the avoidance of doubt, the base management fee rate on assets that exceed 200% of the net asset value of the combined company would remain 1.00%) with no change to the basis of calculation.

• Credit Facility Amendment: As previously disclosed, on September 6, 2023, the Company entered into its eighth amendment under its credit facility which (i) extended the maturity date of the loans made under the credit facility to September 6, 2028, (ii) extended the termination date of the commitments available under the credit facility to September 6, 2027, (iii) reduced the applicable margin to be applied to interest on the loans by 25 basis points per annum to either 1.75% or 2.00% for SOFR based borrowings depending on the ratio of the borrowing base to certain committed indebtedness, (iv) reduced the commitment fee on unused commitments from 40 basis points per annum to 37.5 basis points per annum, and (v) subject to certain closing conditions being met, permits the Company to merge with and into Merger Sub, with Merger Sub continuing as the surviving company and as a wholly-owned subsidiary of Special Value Continuation Partners LLC, a Delaware limited liability company and a wholly owned subsidiary of TCPC. For more information, please refer to the Form 8-K as filed with the SEC on September 6, 2023.
• Non-Core Legacy Portfolio and Other Junior Capital Exposure: As of September 30, 2023, the Company's non-core assets represented just 0.01% of the entire portfolio at fair value, down from 9% at the end of 2020. As of September 30, 2023, the Company’s other junior capital (including unsecured/subordinated debt and equity) exposure, excluding non-core assets, remained low at 4% of the portfolio, down from 6% at December 31, 2021 and 21% at December 31, 2020.
• Share Repurchase Program: No shares were repurchased under our existing share repurchase program, during the third quarter of 2023. Cumulative repurchases since BlackRock entered into the investment management agreement with the Company in early 2015 total approximately 10.2 million shares for $61.1 million. Since the inception of the share repurchase program through September 30, 2023, the Company has purchased over 11.9 million shares at an average price of $6.16 per share, including brokerage commissions, for a total of $73.4 million. As of September 30, 2023, 8,000,000 shares remained authorized for repurchase. Upon expiration of the current share repurchase program on November 6, 2023, the Company's Board of Directors reapproved the authorization for the Company to purchase up to a total of 8,000,000 shares, commencing on November 7, 2023 and effective until the earlier of (i) November 6, 2024 or (ii) such time that all the authorized shares have been repurchased, subject to the terms of the share repurchase program.

Third Quarter Financial Updates

• NII was $9.5 million, or approximately $0.13 per share, for the three months ended September 30, 2023, up from $8.9 million in the prior quarter. The increase was due largely to additional income earned on $11.0 million of net deployments into portfolio company investments over the last two quarters as well as $1.0 million in fee and other one-time income from investment exits during the third quarter, partially offset by a $0.8 million increase in operating expenses during the quarter. Relative to our declared dividend of $0.10 per share, dividend coverage was 131% on a GAAP basis, up from 123% in the prior quarter and from 105% in the third quarter of 2022. As compared to the third quarter of 2022, NII for the quarter increased $1.9 million, representing a 24% year-over-year increase.
• NAV increased to $317.6 million at September 30, 2023, up from $314.0 million at June 30, 2023, driven by $2.3 million of NII in excess of the declared dividend and $1.3 million of net realized and unrealized gains during the quarter. NAV per share increased to $4.38 per share from $4.33 per share as of June 30, 2023.

Portfolio and Investment Activity*

• We deployed $40.3 million during the quarter while exits and repayments totaled $43.6 million, resulting in a $3.3 million net decrease in our portfolio.

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

New Portfolio Companies

• $4.5 million S + 9.00% first lien term loan to Nephron Pharmaceuticals Corp. et al, a pharmaceutical company specializing in manufacturing generic respiratory medications;
• $2.0 million S + 6.50% first lien term loan and $0.2 million partially funded revolver to Trintech, Inc., a software provider of cloud-based reconciliation and financial close solutions; and
• $0.3 million S + 6.00% first lien term loan, $0.3 million partially funded DDTL and $0.1 million partially funded revolver to Vortex Companies, LLC, a solutions provider of water and wastewater infrastructure rehabilitation.

Existing Portfolio Companies

• $14.2 million SOFR ("S") + 9.00% first lien term loans and $1.9 million unfunded delayed draw term loan ("DDTL") to SellerX Germany GmbH, a consolidator of small to medium sized brands that sell through Amazon’s third-party platform. This investment was made following the combination of two prior portfolio companies, SellerX and Elevate, which effectively consolidated the prior financings to these portfolio companies into a single new credit facility. On a net basis, the Company’s funded exposure to SellerX and Elevate did not change during the quarter. The prior financings are treated as exits as described below;
• $6.8 million S + 7.25% first lien term loan and $0.7 million unfunded revolver to Bluefin Holding, LLC (Allvue), a provider of enterprise software solutions to alternative investment managers. This investment was made following a refinancing of our prior investment in Bluefin which is treated as an exit as described below;
• $4.7 million S + 6.75% first lien term loan to Calceus Acquisition, Inc. (Cole Haan), a lifestyle retailer of apparel, footwear and accessories. This investment was made following a refinancing of our prior investment in Cole Haan which is treated as an exit as described below;
• $4.6 million S + 6.50% first lien term loan and $0.4 million unfunded revolver to e-Discovery Acquireco, LLC (Reveal), an electronic discovery software provider. This investment was made following a refinancing of our prior investment in Reveal which is treated as an exit as described below;
• $2.3 million S + 6.00% unfunded DDTL and $0.4 million partially funded revolver to Modigent, LLC (fka Pueblo Mechanical and Controls, LLC); and
• $0.8 million S + 8.00% first lien term loan to Bonterra LLC (fka Cybergrants Holdings, LLC).

• Exits and repayments were primarily concentrated in eleven portfolio companies, including three partial paydowns, with a total of $1.0 million in fee and other one-time income generated on these transactions:

• $7.7 million full repayment at par of first lien DDTL in Elevate Brands OpCo LLC;
• $7.6 million full repayment at par of first lien term loans in Syntellis Parent, LLC (Axiom Software);
• $6.4 million full repayment at par of first lien DDTL in SellerX Germany GmbH & Co. Kg;
• $5.1 million partial repayment at par of first lien term loan in PVHC Holding Corp.;
• $4.8 million full repayment at par of second lien term loan in Bluefin Holding, LLC (BlackMountain);
• $4.6 million full repayment at par of first lien term loan and senior secured notes in Calceus Acquisition, Inc. (Cole Haan);
• $2.8 million full repayment at par of first lien term loans in Reveal Data Corporation et al;
• $1.1 million full repayment at par of second lien term loan in VT TopCo, Inc. (Veritext);
• $0.7 million partial repayment at par of first lien term loans and revolver in Backoffice Associates Holdings, LLC (Syniti);
• $0.6 million partial repayment of first lien term loan, DDTL, and revolver in Accordion Partners LLC; and
• $0.2 million of proceeds from the exit of warrants in FinancialForce.com, Inc.

• As of September 30, 2023, our first lien term loan in Whele LLC (Perch) was designated as a non-accrual investment position, due to a continued decline in operating performance. At quarter-end, the Company had three non-accrual investment positions, representing approximately 3.4% and 12.0% of total debt and preferred stock investments, at fair value and cost, respectively.
• The weighted average internal investment rating of the portfolio at FMV was 1.45 at September 30, 2023, as compared to 1.44 at June 30, 2023 and 1.33 at December 31, 2022.
• During the quarter ended September 30, 2023, net realized and unrealized gains were $1.3 million, including $1.3 million of unrealized appreciation and $0.2 million of realized gain on investments, partially offset by $(0.2) million of unrealized depreciation on our interest rate swap during the quarter.

Liquidity and Capital Resources

• At September 30, 2023, we had $8.8 million in cash and cash equivalents and $81.0 million of availability under our Credit Facility, subject to leverage restrictions, resulting in $89.8 million of availability for deployment into portfolio company investments, including current unfunded commitments, and for general use in the normal course of business.
• Net leverage, adjusted for available cash, receivables for investments sold, payables for investments purchased and unamortized debt issuance costs, was 0.84x at quarter-end, and our 214% asset coverage ratio provided the Company with additional debt capacity of $81.0 million under its asset coverage requirements, subject to borrowing capacity and borrowing base restrictions. Further, as of September 30, 2023, approximately 83% of our assets were invested in qualifying assets, exceeding the 70% requirement for a business development company under Section 55(a) of the Investment Company Act of 1940.
• For the fourth quarter of 2023, the Company declared a cash dividend of $0.10 per share, payable on January 8, 2024 to stockholders of record at the close of business on December 15, 2023.

Conference Call

BlackRock Capital Investment Corporation will host a webcast/teleconference at 10:00 a.m. (Eastern Time) on Thursday, November 9, 2023, to discuss its third quarter 2023 financial results. All interested parties are welcome to participate. You can access the teleconference by dialing, from the United States, (866) 400-0049 or from outside the United States, +1 (720) 543-0302, 10 minutes before 10:00 a.m. and referencing the BlackRock Capital Investment Corporation Conference Call (ID Number 4863202). This teleconference can also be accessed using Microsoft Edge, Google Chrome, or Firefox via this link: BlackRock Capital Investment Corporation Third Quarter 2023 Earnings Call. Once clicked-on, please enter your information to be connected. Please note that the link becomes active 15 minutes prior to the scheduled start time. A live, listen-only webcast will also be available via the investor relations section of www.blackrockbkcc.com.

The teleconference and the webcast will be available for replay by 3:00 p.m. on Thursday, November 9, 2023 and ending at 3:00 p.m. on Thursday, November 23, 2023. The replay of the teleconference can be accessed via the following link: BlackRock Capital Investment Corporation Third Quarter 2023 Earnings Call Replay. To access the webcast, please visit the investor relations section of www.blackrockbkcc.com.

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.

About BlackRock Capital Investment Corporation

Formed in 2005, 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. We invest primarily in middle-market companies in the form of senior debt securities and loans, and our investment portfolio may include junior secured and unsecured debt securities and loans, each of which may include an equity component.

Investor Contact:
Nik Singhal
212.810.5427

Press Contact:
Christopher Beattie
646.231.8518