August 6, 2015

TCP Capital Corp. Announces Strong Second Quarter 2015 Financial Results; Net Investment Income Of $0.44 Per Share; Board Declares Third Quarter Dividend Of $0.36 Per Share

SANTA MONICA, Calif., Aug. 6, 2015 /PRNewswire/ -- TCP Capital Corp. ("we," "us," "our," "TCPC" or the "Company"), a business development company ("BDC") (NASDAQ: TCPC), today announced its financial results for the second quarter ended June 30, 2015 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.

TCP Capital Corp.

FINANCIAL HIGHLIGHTS

  • Net investment income for the quarter ended June 30, 2015 was $21.5 million, or $0.44 per share on a diluted basis, after preferred dividends and $0.11 per share in incentive compensation on net investment income.
  • Net increase in net assets resulting from operations for the quarter ended June 30, 2015 was $21.0 million, or $0.43 per share.
  • Net asset value per share at June 30, 2015 increased to $15.10 from $15.03 at March 31, 2015.
  • Total acquisitions during the quarter ended June 30, 2015 were $195.9 million and total dispositions were $189.7 million.
  • In June, we repurchased 1,675 of our Series A preferred interests with an aggregate liquidation preference of $33.5 million for a purchase price of $31.8 million, generating a gain of $1.7 million, or $0.03 per share.
  • In August, we increased the aggregate principal commitment on the TCPC Funding Facility to $350 million and expanded the accordion feature to $400 million.
  • On August 6, 2015, our board of directors declared a third quarter dividend of $0.36 per share payable on September 30, 2015 to shareholders of record as of September 16, 2015.

"We are pleased with our strong performance for the second quarter," said TCP Capital Corp.'s Chairman and CEO, Howard Levkowitz.  "We deployed capital at a robust pace, with $196 million in new investments across eighteen transactions.  We out-earned our dividend by $0.08 cents per share, in part due to the high level of repayments during the quarter. In addition, our new investments had higher effective yields than the investments we exited for the ninth consecutive quarter."

"Our relatively flat net deployments underscore our focus on patiently seeking attractive investment opportunities versus over-emphasizing growth in the current environment. Earnings power from our current portfolio is strong, and with our expanded origination platform, we remain well positioned to meet ongoing demand for growth capital from middle market companies."

PORTFOLIO AND INVESTMENT ACTIVITY

As of June 30, 2015, our investment portfolio consisted of debt and equity positions in 87 portfolio companies with a total fair value of approximately $1,212.0 million. Debt positions represented approximately 97% of the portfolio at fair value, all of which were senior secured debt. Equity positions represented approximately 3% of our investment portfolio.

As of June 30, 2015, the weighted average annual effective yield of our debt portfolio was approximately 10.9%.(1) As of June 30, 2015, approximately 77% of our debt portfolio at fair value had floating interest rates. As of June 30, 2015, we had two debt investments on non-accrual status totaling 0.3% of the portfolio at fair value.

During the three months ended June 30, 2015, we invested approximately $195.9 million in seven new and eleven existing portfolio companies. The investments were comprised of approximately $165.6 million in senior secured loans, $29.6 million in senior secured notes, and $0.7 million in equity investments. Additionally, we received proceeds from sales and repayments of investment principal of approximately $189.7 million. We expect to continue to invest in senior secured loans, bonds and subordinated debt, as well as select equity investments, to obtain a high level of current income and create the potential for appreciation, with an emphasis on principal protection.

As of June 30, 2015, total assets were $1,280.9 million, net assets applicable to common shareholders was $739.4 million and net asset value per share was $15.10, as compared to $1,260.5 million, $732.3 million, and $15.03 per share, respectively on March 31, 2015.

CONSOLIDATED RESULTS OF OPERATIONS

Total investment income for the three months ended June 30, 2015 was approximately $38.9 million, or $0.80 per share, including $0.09 per share from original issue discount and fee amortization ($0.05 of which was recognized in connection with prepayments), an additional $0.05 per share from prepayment premiums, $0.03 per share from income paid in kind, and $0.02 per share of syndication fee income. This reflects our policy of recording interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Origination, structuring, closing, commitment, and similar upfront fees received in connection with the outlay of capital are generally amortized or accreted into interest income over the life of the respective debt investment. Total investment income was net of $0.6 million of depreciation expense from aircraft we own and lease (through portfolio trusts), or $0.01 per share.

Total operating expenses for the three months ended June 30, 2015 were approximately $11.7 million, or $0.24 per share including $0.6 million in nonrecurring transaction related professional fees. Dividends accrued on the preferred leverage facility were approximately $0.4 million, or $0.01 per share. We also incurred incentive compensation from net investment income of $5.4 million, or $0.11 per share. Excluding incentive compensation, annualized second quarter expenses, including all costs of leverage (both interest expense and preferred dividends), were 6.1% of average net assets.

Net investment income for the three months ended June 30, 2015 was approximately $27.3 million, or $0.56 per share, before related incentive compensation and preferred dividends. Net investment income after related incentive compensation and preferred dividends was $21.5 million, or $0.44 per share.

Net realized and unrealized losses for the three months ended June 30, 2015 were $2.2 million, or $0.05 per share, comprised of net realized losses of $9.3 million and net unrealized gains of $7.1 million. The net realized losses during the period were due primarily to the restructure of our loan to Edmentum, Inc., in which we received new debt and equity in a delevered company.

Gains on our repurchase of Series A preferred interests during the three months ended June 30, 2015 were $1.7 million, or $0.03 per share, which resulted from our repurchase of 1,675 preferred interests with an aggregate liquidation preference of $33.5 million for a purchase price of $31.8 million.

Net increase in net assets applicable to common shareholders resulting from operations for the three months ended June 30, 2015 was $21.0 million, or $0.43 per share.

(1) Weighted average annual effective yield includes amortization of deferred debt origination and backend fees and accretion of original issue discount, but excludes market discount, any prepayment and make-whole fee income, and any debt investments on non-accrual status.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2015, available liquidity was approximately $213.8 million, comprised of approximately $36.7 million in cash and cash equivalents and $180.0 million in available capacity under the leverage program, less approximately $2.9 million in net outstanding settlements.

Total leverage outstanding at June 30, 2015 was as follows:



Maturity



Rate


Carrying Value



Available



Total Capacity

Partnership Credit Facility



2016




L+2.50%


$

112,000,000



$

4,000,000



$

116,000,000

TCPC Funding Credit Facility



2019




L+2.25%



165,000,000




135,000,000




300,000,000

Convertible Notes ($108 million par)



2019




5.25%



105,900,159




-




105,900,159

SBA Debentures



2024-2025




2.85%*



34,000,000




41,000,000




75,000,000

Preferred Equity Facility



2016




L+0.85%



100,500,000




-




100,500,000

Total leverage









$

517,400,159



$

180,000,000



$

697,400,159

* Weighted-average interest rate on pooled loans of $28.0 million, excluding fees of 0.36%. As of June 30, 2015, the remaining $6.0 million of the outstanding amount was not yet pooled, and bore interest at a temporary rate of 0.59% plus fees of 0.36% through September 23, 2015, the date of the next SBA pooling.

Except for the Convertible Notes, all carrying values are the same as the principal amounts outstanding.

Anticipated total SBA leverage of $150 million

The combined weighted-average interest and dividend rates on amounts outstanding on the total leverage program as of June 30, 2015 was 2.93%.

On August 4, 2015, the Company's Board of Directors re-approved a stock repurchase plan to acquire up to $50 million in the aggregate of the Company's common stock at prices at certain thresholds below the Company's net asset value per share, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934.

RECENT DEVELOPMENTS

On July 13, 2015, we obtained exemptive relief from the SEC to permit us to exclude the debt of TCPC SBIC LP guaranteed by the SBA from our 200% asset coverage test under the 1940 Act. The exemptive relief provides us with increased flexibility under the 200% asset coverage test by permitting the SBIC to borrow up to $150 million more than it would otherwise be able to absent the receipt of this exemptive relief.

On August 4, 2015, we increased the aggregate principal commitment on the TCPC Funding Facility to $350 million and expanded the accordion feature to $400 million.

On August 6, 2015, the Company's board of directors declared a third quarter regular cash dividend of $0.36 per share payable on September 30, 2015 to stockholders of record as of the close of business on September 16, 2015.

CONFERENCE CALL AND WEBCAST

TCP Capital Corp. will host a conference call on Thursday, August 6, 2015 at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time) to discuss its quarterly financial results. All interested parties are invited to participate in the conference call by dialing (866) 393-0571; international callers should dial (206) 453-2872. Participants should enter the Conference ID 77012616 when prompted. For a slide presentation that we intend to refer to on the earnings conference call, please visit the Investor Relations section of our website (www.tcpcapital.com) and click on the Second Quarter 2015 Investor Presentation under Events and Presentations. The conference call will be webcast simultaneously in the investor relations section of our website at http://investors.tcpcapital.com/. An archived replay of the call will be available approximately two hours after the live call, through August 13, 2015. For the replay, please visit http://investors.tcpcapital.com/events.cfm or dial (855) 859-2056. For international replay, please dial (404) 537-3406. For all replays, please reference program ID number 77012616.

TCP Capital Corp.

Consolidated Statements of Assets and Liabilities







June 30, 2015



December 31, 2014




(unaudited)






Assets









Investments, at fair value:









Companies less than 5% owned (cost of $1,139,275,409 and $1,097,181,753, respectively)


$

1,131,417,557



$

1,081,901,384


Companies 5% to 25% owned (cost of $69,820,923 and $52,103,511, respectively)



65,722,069




48,716,425


Companies more than 25% owned (cost of $39,025,525 and $40,213,258 respectively)



14,835,423




15,918,077


Total investments (cost of $1,248,121,857 and $1,189,498,522, respectively)



1,211,975,049




1,146,535,886











Cash and cash equivalents



36,706,214




27,268,792


Deferred debt issuance costs



7,271,953




7,700,988


Receivable for investments sold



9,631,353




10,961,369


Accrued interest income:









Companies less than 5% owned



8,917,630




9,222,001


Companies 5% to 25% owned



544,098




253,987


Companies more than 25% owned



337,258




28,450


Unrealized appreciation on swaps



2,866,985




1,717,610


Options (cost $51,750)



30




497


Prepaid expenses and other assets



2,629,301




2,177,217


Total assets



1,280,879,871




1,205,866,797











Liabilities









Debt



416,900,159




328,696,830


Payable for investments purchased



12,513,559




2,049,518


Incentive allocation payable



5,383,885




4,303,040


Interest payable



2,074,858




1,510,981


Payable to the Investment Manager



908,347




459,827


Accrued expenses and other liabilities



2,772,724




3,219,783


Total liabilities



440,553,532




340,239,979











Commitments and contingencies (Note 5)


















Preferred equity facility









Series A preferred limited partner interests in Special Value Continuation Partners, LP;









$20,000/interest liquidation preference; 5,025 and 6,700 interests authorized, issued and









outstanding as of June 30, 2015 and December 31, 2014, respectively



100,500,000




134,000,000


Accumulated dividends on Series A preferred equity facility



398,541




497,790


Total preferred limited partner interests



100,898,541




134,497,790











Non-controlling interest









General Partner interest in Special Value Continuation Partners, LP



-




-











Net assets applicable to common shareholders


$

739,427,798



$

731,129,028











Composition of net assets applicable to common shareholders









Common stock, $0.001 par value; 200,000,000 shares authorized, 48,959,494 and









  48,710,627 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively



48,959




48,710


Paid-in capital in excess of par



881,053,660




877,103,880


Accumulated net investment income



26,337,559




21,884,381


Accumulated net realized losses



(134,162,549)




(126,408,033)


Accumulated net unrealized depreciation



(33,849,831)




(41,499,910)


Net assets applicable to common shareholders


$

739,427,798



$

731,129,028











Net assets per share


$

15.10



$

15.01



TCP Capital Corp.

Consolidated Statements of Operations (Unaudited)




Three Months Ended June 30,



Six Months Ended June 30,




2015



2014



2015



2014


Investment income

















Interest income:

















Companies less than 5% owned


$

36,133,215



$

22,333,382



$

66,410,364



$

40,474,125


Companies 5% to 25% owned



1,203,388




1,357,315




2,311,666




2,694,179


Companies more than 25% owned



148,269




234,835




319,094




492,462


Dividend income:

















Companies 5% to 25% owned



-




-




-




1,968,748


Lease income:

















Companies 5% to 25% owned



-




87,504




-




208,543


Companies more than 25% owned



331,336




254,682




623,042




463,572


Other income:

















Companies less than 5% owned



1,121,612




319,582




2,089,007




954,316


Total investment income



38,937,820




24,587,300




71,753,173




47,255,945



















Operating expenses

















Management and advisory fees



4,618,214




3,104,872




8,977,412




5,991,080


Interest expense



3,518,811




1,019,751




6,741,661




1,476,612


Amortization of deferred debt issuance costs



514,289




429,394




1,074,535




802,148


Legal fees, professional fees and due diligence expenses



1,262,653




355,237




1,568,775




559,393


Administrative expenses



389,643




379,469




782,437




636,275


Commitment fees



282,921




215,864




604,443




407,062


Insurance expense



89,324




64,928




172,801




118,828


Director fees



80,750




81,670




165,840




167,382


Custody fees



69,062




60,849




139,250




111,656


Other operating expenses



842,818




449,058




1,316,203




768,644


Total operating expenses



11,668,485




6,161,092




21,543,357




11,039,080


Net investment income



27,269,335




18,426,208




50,209,816




36,216,865


Net realized and unrealized gain (loss) on investments and foreign currency

















Net realized gain (loss):

















Investments in companies less than 5% owned



(9,343,606)




125,710




(9,449,473)




(6,670,011)


Investments in companies 5% to 25% owned



395




808,036




790




808,411


Investments in companies more than 25% owned



-




-




19,167




-


Net realized loss



(9,343,211)




933,746




(9,429,516)




(5,861,600)



















Net change in net unrealized appreciation/depreciation



7,128,219




(3,945,684)




7,650,079




8,029,680


Net realized and unrealized gain



(2,214,992)




(3,011,938)




(1,779,437)




2,168,080



















Gain on repurchase of Series A preferred interests



1,675,000




-




1,675,000




-


Dividends on Series A preferred equity facility



(428,422)




(356,677)




(791,095)




(725,812)


Net change in accumulated dividends on Series A

















preferred equity facility



78,515




(383)




99,249




10,112


Distributions of incentive allocation to the General Partner from:

















Net investment income



(5,383,887)




(3,613,830)




(9,903,596)




(7,100,233)


Net change in reserve for incentive allocation



-




602,388




-




(433,616)


Net increase in net assets applicable to common  shareholders resulting from operations


$

20,995,549



$

12,045,768



$

39,509,937



$

30,135,396


Basic and diluted earnings per common share


$

0.43



$

0.33



$

0.81



$

0.83


Basic and diluted weighted average common shares outstanding



48,903,081




36,200,021




48,807,788




36,199,969



ABOUT TCP CAPITAL CORP.

TCP Capital Corp. (NASDAQ: TCPC) is a specialty finance company focused on performing credit lending to middle-market companies as well as small businesses.  TCPC lends primarily to companies with established market positions, strong regional or national operations, differentiated products and services and sustainable competitive advantages, investing across industries in which it has significant knowledge and expertise.  TCPC's investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. TCPC is a publicly-traded business development company, or BDC, regulated under the Investment Company Act of 1940 and is externally managed by its advisor, Tennenbaum Capital Partners, LLC, a leading alternative investment manager. For more information, visit www.tcpcapital.com.

FORWARD-LOOKING STATEMENTS

Prospective investors considering an investment in TCP Capital Corp. should consider the investment objectives, risks and expenses of the company carefully before investing. This information and other information about the company are available in the company's filings with the Securities and Exchange Commission ("SEC"). Copies are available on the SEC's website at www.sec.gov and the company's website at www.tcpcapital.com. Prospective investors should read these materials carefully before investing.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in general economic conditions or changes in the conditions of the industries in which the company makes investments, risks associated with the availability and terms of financing, changes in interest rates, availability of transactions, and regulatory changes. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in the "Risks" section of the company's prospectus dated July 1, 2015 and the company's subsequent periodic filings with the SEC. Copies are available on the SEC's website at www.sec.gov and the company's website at www.tcpcapital.com. Forward-looking statements are made as of the date of this press release, and are subject to change without notice. The company has no duty and does not undertake any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

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