SANTA MONICA, Calif.--(BUSINESS WIRE)--
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, 2013 and filed
its Form 10-Q with the U.S. Securities and Exchange Commission.
FINANCIAL HIGHLIGHTS
-
Net investment income for the quarter ended June 30, 2013 was $8.9
million, or $0.38 per share on a diluted basis, after preferred
dividends and net of $0.09 per share in incentive compensation on net
investment income.
-
Net increase in net assets resulting from operations for the quarter
ended June 30, 2013 was $9.4 million, or $0.40 per share.
-
Total acquisitions during the quarter ended June 30, 2013 were $130.6
million and total acquisitions net of total dispositions were $60.6
million.
-
On August 8, 2013, our board of directors declared a third quarter
dividend of $0.36 per share payable on September 30, 2013 to
shareholders of record as of September 9, 2013.
-
On May 24, we closed a follow-on offering of 5,175,000 shares of our
common stock at $15.63 per share.
-
On May 17, we closed a new $50 million revolving credit facility with
Deutsche Bank, which has an accordion feature that allows for
expansion of the facility up to $100 million.
"We are pleased with our second quarter results," said TCP Capital
Corp.'s Chairman and CEO, Howard Levkowitz. "Our strong earnings this
quarter were almost entirely from recurring income. This quarter we also
significantly expanded our financing flexibility and we deployed $131
million this quarter into 13 investments, the highest level since our
IPO. We continue to see a robust pipeline of deal flow across a variety
of industries. As we continue to grow our portfolio, we will take a
highly selective approach to choosing investments with a focus on
delivering strong risk adjusted returns to our shareholders."
PORTFOLIO AND INVESTMENT ACTIVITY
As of June 30, 2013, our investment portfolio consisted of debt and
equity positions in 57 portfolio companies with a total fair value of
approximately $571.8 million. Debt positions represented approximately
93% of the portfolio fair value, 97% of which were senior secured debt.
Equity positions represented approximately 7% of our investment
portfolio.
As of June 30, 2013, the weighted average annual effective yield of our
debt portfolio was approximately 10.9%.(1) As of June 30,
2013, approximately 74% of our debt portfolio at fair value had floating
interest rates, approximately 93% of which had interest rate floors, and
approximately 26% of our debt portfolio had fixed interest rates. As of
June 30, 2013, we had no debt investments on non-accrual status.
During the three months ended June 30, 2013, we invested approximately
$130.6 million in eleven new and two existing portfolio companies. The
investments were comprised of $117.0 million in senior secured floating
rate loans and, $13.6 million in senior secured notes. Additionally, we
received proceeds from sales and repayments of investment principal of
approximately $70.0 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, 2013, total assets were $623.4 million, net assets
applicable to common shareholders was $398.2 million and net asset value
per share was $14.94, as compared to $530.0 million, $320.2 million, and
$14.91 per share, respectively on March 31, 2013.
CONSOLIDATED RESULTS OF OPERATIONS
Total investment income for the three months ended June 30, 2013 was
approximately $14.5 million, or $0.61 per share, including $0.01 per
share from non-recurring fee income, $0.02 per share from original issue
discount accretion and $0.01 per share from income paid in kind. 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 $0.03 per share.
Total operating expenses for the three months ended June 30, 2013 were
approximately $3.0 million, or $0.13 per share. Dividends accrued on the
preferred leverage facility were approximately $0.4 million, or $0.02
per share. We also incurred incentive compensation from net investment
income of $2.2 million, or $0.09 per share, incentive compensation from
realized gains of $0.3 million, or $0.01 per share, and a reduction in
the reserve for incentive compensation of $0.1 million, or $0.01 per
share. Excluding incentive compensation, annualized second quarter
expenses, including all costs of leverage (both interest expense and
preferred dividends), were 3.7% of average net assets.
Net investment income for the three months ended June 30, 2013 was
approximately $11.5 million, or $0.48 per share, before related
incentive compensation and preferred dividends. Net investment income
after related incentive compensation and preferred dividends was $8.9
million, or $0.38 per share.
Net realized losses for the three months ended June 30, 2013 were $4.1
million, or $0.17 per share. Net realized losses primarily reflected a
charge on the recapitalization of AGY. The initial AGY investment was
part of our legacy distressed debt strategy and has generated
substantial cash interest income. During the three months ended June 30,
2013, we recognized $4.8 million, or $0.20 per share, in net unrealized
appreciation from mark to market adjustments throughout our portfolio
and reversals of prior period unrealized depreciation.
Net increase in net assets applicable to common shareholders resulting
from operations for the three months ended June 30, 2013 was $9.7
million, or $0.40 per share, as compared to $12.8 million, or $0.60 per
share for the quarter ended March 31, 2013.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2013, available liquidity was approximately $100.6
million, comprised of approximately $108 million in available capacity
under the credit facilities, less $7.4 million in net outstanding
investment commitments (net of approximately $40.0 million in cash and
cash equivalents).
Total leverage outstanding at June 30, 2013 was $167.0 million,
comprised of $33.0 million on our revolving credit facilities and $134.0
million on our preferred equity facility. The weighted average interest
rate on amounts outstanding on the total leverage facility as of June
30, 2013 was 1.39%.
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Leverage Program ($300 million):
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Rate
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Maturity
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$116mm Partnership Credit Facility
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LIBOR + 0.44%
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July 2014 |
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$50mm TCPC Funding Credit Facility*
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LIBOR + 2.75%
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May 2016 |
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$134mm Preferred Equity Facility
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LIBOR + 0.85%
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July 2016 |
*$25 million at June 30, 2013, automatically increasing to $50 million
in August 2013
RECENT DEVELOPMENTS
On August 8, 2013, the Company's board of directors declared a third
quarter cash dividend of $0.36 per share payable on September 30, 2013
to stockholders of record as of the close of business on September 9,
2013.
The Company submitted an application for a SBIC license and received a
"Green Light" letter from the U.S. Small Business Administration
allowing the Company to proceed with the application process. The
Company subsequently received acceptance of its follow-up application.
Philip Tseng, a managing partner of Tennenbaum Capital Partners, LLC,
who has been with the Advisor since 2004, will join our Investment
Committee as a replacement for Michael E. Tennenbaum.
CONFERENCE CALL AND WEBCAST
TCP Capital Corp. will host a conference call on Thursday, August 8,
2013 at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time) to discuss its
second quarter 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 13821590 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 2013 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 15, 2013. 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 13821590.
|
(1) |
|
Weighted average annual effective yield includes amortization of
deferred debt origination 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.
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TCP Capital Corp. |
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Consolidated Statements of Assets and Liabilities
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June 30, 2013 |
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December 31, 2012 |
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(unaudited)
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Assets
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Investments, at fair value:
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Unaffiliated issuers (cost of $561,129,297 and $508,302,758,
respectively)
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|
$
|
501,648,852
|
|
|
|
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$
|
440,772,190
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|
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Controlled companies (cost of $43,776,456 and $44,964,189
respectively)
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20,863,780
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22,489,208
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Other affiliates (cost of $51,724,840 and $55,803,421, respectively)
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49,249,412
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54,421,689
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Total investments (cost of $656,630,593 and $609,070,368,
respectively)
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571,762,044
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517,683,087
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Cash and cash equivalents
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40,065,668
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18,035,189
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Accrued interest income:
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Unaffiliated issuers
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5,483,176
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|
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4,039,149
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Controlled companies
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47,773
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53,524
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Other affiliates
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807,362
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482,634
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Receivable for investments sold
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2,695,000
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7,727,415
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Deferred debt issuance costs
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1,234,215
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696,018
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Unrealized appreciation on swaps
|
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271,816
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179,364
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Prepaid expenses and other assets
|
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1,041,845
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|
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345,722
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Total assets
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623,408,899
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549,242,102
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Liabilities
|
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Debt
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33,000,000
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74,000,000
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Incentive allocation payable
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2,476,035
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-
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Payable for investments purchased
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50,179,344
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|
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21,814,819
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Interest payable
|
|
|
|
|
|
225,981
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|
|
|
|
|
|
119,233
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Payable to the Investment Manager
|
|
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|
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|
625,006
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|
|
|
|
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109,200
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Management and advisory fees payable
|
|
|
|
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|
1,940,295
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|
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-
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Accrued expenses and other liabilities
|
|
|
|
|
|
1,938,607
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|
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|
2,685,015
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Total liabilities
|
|
|
|
|
|
90,385,268
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98,728,267
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Preferred equity facility
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Series A preferred limited partner interests in Special Value
Continuation Partners, LP; $20,000/interest liquidation
preference; 6,700 interests authorized, issued and outstanding
|
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134,000,000
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|
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|
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|
134,000,000
|
|
|
Accumulated dividends on Series A preferred equity facility
|
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|
|
|
491,163
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|
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|
|
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|
526,285
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|
|
Total preferred limited partner interests
|
|
|
|
|
|
134,491,163
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|
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|
|
|
|
134,526,285
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Non-controlling interest
|
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|
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|
General Partner interest in Special Value Continuation Partners, LP |
|
|
|
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344,310
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|
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|
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|
-
|
|
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|
|
|
|
|
|
|
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|
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Net assets applicable to common shareholders
|
|
|
|
|
$
|
398,188,158
|
|
|
|
|
|
$
|
315,987,550
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Composition of net assets applicable to common shareholders
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Common stock, $0.001 par value; 200,000,000 shares authorized,
26,654,701 and 21,477,628 shares issued and outstanding as of June
30, 2013 and December 31, 2012, respectively
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26,655
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21,478
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|
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Paid-in capital in excess of par
|
|
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522,439,540
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444,234,060
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Accumulated net investment income
|
|
|
|
|
|
23,502,379
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|
|
|
|
|
|
22,526,179
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|
|
Accumulated net realized losses
|
|
|
|
|
|
(62,601,363
|
)
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|
(59,023,861
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)
|
|
Accumulated net unrealized depreciation
|
|
|
|
|
|
(85,179,053
|
)
|
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|
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|
|
(91,770,306
|
)
|
|
Net assets applicable to common shareholders
|
|
|
|
|
$
|
398,188,158
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|
|
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|
$
|
315,987,550
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Net assets per share
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|
$
|
14.94
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|
|
|
$
|
14.71
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|
See accompanying notes.
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|
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TCP Capital Corp. |
|
Consolidated Statements of Operations (Unaudited)
|
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|
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Three Months Ended June 30,
|
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Six Months Ended June 30,
|
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|
2013
|
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|
2012(1)
|
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|
2013
|
|
|
2012(1)
|
|
Investment income
|
|
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|
|
|
|
|
|
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Interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaffiliated issuers
|
|
|
$
|
12,247,602
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|
|
|
$
|
8,824,978
|
|
|
|
$
|
27,487,968
|
|
|
|
$
|
16,977,526
|
|
|
Controlled companies
|
|
|
|
312,268
|
|
|
|
|
-
|
|
|
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642,585
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|
|
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|
-
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Other affiliates
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|
1,202,653
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|
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|
|
1,562,916
|
|
|
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|
2,096,165
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|
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|
3,245,630
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|
Dividend income:
|
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Other affiliates
|
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|
-
|
|
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|
-
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|
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-
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|
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|
1,811,189
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Other income:
|
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|
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|
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|
|
|
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|
Unaffiliated issuers
|
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|
419,415
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|
|
520,580
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|
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|
|
576,948
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|
|
|
|
520,580
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|
Controlled companies
|
|
|
|
168,604
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|
|
|
|
-
|
|
|
|
|
311,515
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|
|
|
|
-
|
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|
Other affiliates
|
|
|
|
118,653
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|
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|
|
177,984
|
|
|
|
|
219,756
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|
|
|
|
345,858
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|
Total investment income
|
|
|
|
14,469,195
|
|
|
|
|
11,086,458
|
|
|
|
|
31,334,937
|
|
|
|
|
22,900,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management and advisory fees
|
|
|
|
1,940,295
|
|
|
|
|
1,552,867
|
|
|
|
|
3,905,033
|
|
|
|
|
3,249,664
|
|
|
Professional fees relating to the Conversion
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
411,523
|
|
|
Administrative expenses
|
|
|
|
167,808
|
|
|
|
|
-
|
|
|
|
|
335,616
|
|
|
|
|
-
|
|
|
Amortization of deferred debt issuance costs
|
|
|
|
142,914
|
|
|
|
|
109,771
|
|
|
|
|
251,478
|
|
|
|
|
219,542
|
|
|
Legal fees, professional fees and due diligence expenses
|
|
|
|
162,152
|
|
|
|
|
270,991
|
|
|
|
|
301,204
|
|
|
|
|
361,776
|
|
|
Interest expense
|
|
|
|
186,702
|
|
|
|
|
9,929
|
|
|
|
|
323,109
|
|
|
|
|
56,448
|
|
|
Commitment fees
|
|
|
|
38,506
|
|
|
|
|
70,153
|
|
|
|
|
61,094
|
|
|
|
|
132,361
|
|
|
Director fees
|
|
|
|
72,000
|
|
|
|
|
46,500
|
|
|
|
|
143,809
|
|
|
|
|
100,000
|
|
|
Insurance expense
|
|
|
|
42,522
|
|
|
|
|
27,072
|
|
|
|
|
78,795
|
|
|
|
|
55,963
|
|
|
Custody fees
|
|
|
|
30,232
|
|
|
|
|
23,469
|
|
|
|
|
59,651
|
|
|
|
|
46,503
|
|
|
Other operating expenses
|
|
|
|
224,535
|
|
|
|
|
54,668
|
|
|
|
|
417,506
|
|
|
|
|
107,863
|
|
|
Total operating expenses
|
|
|
|
3,007,666
|
|
|
|
|
2,165,420
|
|
|
|
|
5,877,295
|
|
|
|
|
4,741,643
|
|
|
Net investment income before taxes
|
|
|
|
11,461,529
|
|
|
|
|
8,921,038
|
|
|
|
|
25,457,642
|
|
|
|
|
18,159,140
|
|
|
Excise tax expense
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
502,978
|
|
|
Net investment income
|
|
|
|
11,461,529
|
|
|
|
|
8,921,038
|
|
|
|
|
25,457,642
|
|
|
|
|
17,656,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized and unrealized gain (loss) on investments and
foreign currency
|
|
|
|
|
|
|
|
|
|
|
Net realized gain (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in unaffiliated issuers
|
|
|
|
(4,095,160
|
)
|
|
|
|
2,928,909
|
|
|
|
|
(3,577,502
|
)
|
|
|
|
(3,104,104
|
)
|
|
Investments in non-controlled affiliates
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
718,845
|
|
|
Net realized gain (loss)
|
|
|
|
(4,095,160
|
)
|
|
|
|
2,928,909
|
|
|
|
|
(3,577,502
|
)
|
|
|
|
(2,385,259
|
)
|
|
Net change in net unrealized appreciation/depreciation
|
|
|
|
4,753,522
|
|
|
|
|
(5,426,269
|
)
|
|
|
|
6,591,253
|
|
|
|
|
(4,999,802
|
)
|
|
Net realized and unrealized gain (loss)
|
|
|
|
658,362
|
|
|
|
|
(2,497,360
|
)
|
|
|
|
3,013,751
|
|
|
|
|
(7,385,061
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid on Series A preferred equity facility
|
|
|
|
(392,669
|
)
|
|
|
|
(373,691
|
)
|
|
|
|
(786,082
|
)
|
|
|
|
(745,183
|
)
|
|
Net change in accumulated dividends on Series A preferred equity
facility
|
|
|
|
19,111
|
|
|
|
|
(23,786
|
)
|
|
|
|
35,122
|
|
|
|
|
(67,093
|
)
|
|
Distributions of incentive allocation to the General Partner from
net investment income
|
|
|
|
(2,217,594
|
)
|
|
|
|
-
|
|
|
|
|
(4,941,336
|
)
|
|
|
|
-
|
|
|
Distributions of incentive allocation to the General Partner from
net realized gains
|
|
|
|
(258,441
|
)
|
|
|
|
-
|
|
|
|
|
(258,441
|
)
|
|
|
|
-
|
|
|
Net change in reserve for incentive allocation
|
|
|
|
126,768
|
|
|
|
|
-
|
|
|
|
|
(344,310
|
)
|
|
|
|
-
|
|
|
Net increase in net assets applicable to common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders resulting from operations
|
|
|
$
|
9,397,066
|
|
|
|
$
|
6,026,201
|
|
|
|
$
|
22,176,346
|
|
|
|
$
|
9,458,825
|
|
|
Basic and diluted earnings per common share
|
|
|
$
|
0.40
|
|
|
|
$
|
0.28
|
|
|
|
$
|
0.98
|
|
|
|
|
N/A
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
|
23,639,742
|
|
|
|
|
21,475,635
|
|
|
|
|
22,564,670
|
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
(1) |
|
Prior to the Conversion on April 2, 2012, the Company's portfolio
had different objectives.
|
|
|
|
|
|
|
|
|
ABOUT TCP CAPITAL CORP.
TCP Capital Corp. (NASDAQ: TCPC) is a specialty finance company focused
on performing credit lending to middle-market companies with established
market positions. TCPC focuses on companies with differentiated products
and strong regional or national operations and where it has deep
industry knowledge and expertise. TCPC's investment objective is to seek
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 supplement dated May 21, 2013 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.
TCP Capital Corp.
Jessica Ekeberg, 310-566-1094
investor.relations@tcpcapital.com
Source: TCP Capital Corp.
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