TCP Capital Corp. (“we,” “us,” “our,” “TCPC” or the “Company”), a business development company (“BDC”) (NASDAQ:TCPC), today announced its financial results for the third quarter ended September 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 September 30, 2013 was $10.6 million, or $0.40 per share on a diluted basis, after preferred dividends and net of $0.10 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 $12.9 million, or $0.48 per share.
- Net Asset Value per share at September 30, 2013 increased to $15.06 per share from $14.94 at June 30, 2013.
- Total acquisitions during the quarter ended September 30, 2013 were $183.7 million and total acquisitions net of total dispositions were $128.2 million.
- November 7, 2013, our board of directors declared a fourth quarter regular dividend of $0.36 per share and a special dividend of $0.05 per share. Both dividends are payable on December 31, 2013 to shareholders of record as of December 10, 2013.
- On September 26, 2013, we priced a follow-on offering of 4,370,000 shares of our common stock at $15.76 per share, which closed on October 1, 2013.
- On September 10, 2013, we expanded our revolving credit facility with Deutsche Bank from $50 million to $100 million and increased the accordion feature that now allows for expansion of the facility up to $200 million.
- On September 19, 2013, we extended the maturity date on our Wells Fargo led facility from July 31, 2014 to July 31, 2016. Borrowings under this facility will continue to accrue interest at a rate of LIBOR plus 0.44% through July 31, 2014 and at a rate of LIBOR plus 2.50% after July 31, 2014.
PORTFOLIO AND INVESTMENT ACTIVITYAs of September 30, 2013, our investment portfolio consisted of debt and equity positions in 66 portfolio companies with a total fair value of approximately $704.1 million. Debt positions represented approximately 95% of the portfolio fair value, 97% of which were senior secured debt. Equity positions represented approximately 5% of our investment portfolio. As of September 30, 2013, the weighted average annual effective yield of our debt portfolio was approximately 10.8%. (1) As of September 30, 2013, approximately 74% of our debt portfolio at fair value had floating interest rates, approximately 91% of which had interest rate floors, and approximately 26% of our debt portfolio had fixed interest rates. As of September 30, 2013, we had no debt investments on non-accrual status. During the three months ended September 30, 2013, we invested approximately $184 million in fifteen new and two existing portfolio companies. The investments were comprised of approximately $143 million in senior secured floating rate loans and, $41 million in senior secured notes. Additionally, we received proceeds from sales and repayments of investment principal of approximately $56 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 September 30, 2013, total assets were $729.3 million, net assets applicable to common shareholders was $401.5 million (exclusive of our follow-on offering which closed on October 1, 2013) and net asset value per share was $15.06, as compared to $623.4 million, $398.2 million, and $14.94 per share, respectively on June 30, 2013. CONSOLIDATED RESULTS OF OPERATIONS Total investment income for the three months ended September 30, 2013 was approximately $17.3 million, or $0.65 per share, including $0.05 per share from prepayment income, $0.01 per share from original issue discount accretion and $0.03 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 $0.02 per share.
Total operating expenses for the three months ended September 30, 2013 were approximately $3.7 million, or $0.14 per share. 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 $2.6 million, or $0.10 per share, incentive compensation from realized gains of $0.1 million, or less than $0.01 per share, and an increase in the reserve for incentive compensation of $0.5 million, or $0.02 per share. Excluding incentive compensation, annualized second quarter expenses, including all costs of leverage (both interest expense and preferred dividends), were 4.0% of average net assets.Net investment income for the three months ended September 30, 2013 was approximately $13.6 million, or $0.51 per share, before related incentive compensation and preferred dividends. Net investment income after related incentive compensation and preferred dividends was $10.6 million, or $0.40 per share. Net realized gains for the three months ended September 30, 2013 were $0.8 million, or $0.03 per share. During the three months ended September 30, 2013, we recognized $2.1 million, or $0.08 per share, in net unrealized appreciation from mark to market adjustments throughout our portfolio. Net increase in net assets applicable to common shareholders resulting from operations for the three months ended September 30, 2013 was $12.9 million, or $0.48 per share, as compared to $9.7 million, or $0.40 per share for the quarter ended June 30, 2013. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2013, available liquidity was approximately $42.9 million, comprised of approximately $66 million in available capacity under the credit facilities, less $23.1 million in net outstanding investment commitments (net of approximately $12.6 million in cash and cash equivalents). This excludes net proceeds of $66.5 million from our follow-on offering which closed on October 1, 2013. Total leverage outstanding at September 30, 2013 was $284.0 million, comprised of $150.0 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 September 30, 2013 was 1.22%.
|Leverage Program ($300 million):||Rate||Maturity|
|$116mm Partnership Credit Facility||LIBOR + 0.44%||July 2016|
|$100mm TCPC Funding Credit Facility||LIBOR + 2.75%||May 2016|
|$134mm Preferred Equity Facility||LIBOR + 0.85%||July 2016|
CONFERENCE CALL AND WEBCASTTCP Capital Corp. will host a conference call on Thursday, November 7, 2013 at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time) to discuss its third 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 84230110 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 Third 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 November 14, 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 84230110. (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.
|TCP Capital Corp.|
|Consolidated Statements of Assets and Liabilities|
|September 30, 2013||December 31, 2012|
|Investments, at fair value:|
|Unaffiliated issuers (cost of $690,002,299 and $508,302,758, respectively)||$||633,694,938||$||440,772,190|
|Controlled companies (cost of $43,182,589 and $44,964,189 respectively)||19,657,258||22,489,208|
|Other affiliates (cost of $53,463,548 and $55,803,421, respectively)||50,743,291||54,421,689|
|Total investments (cost of $786,648,436 and $609,070,368, respectively)||704,095,487||517,683,087|
|Cash and cash equivalents||12,566,659||18,035,189|
|Accrued interest income:|
|Deferred debt issuance costs||3,284,278||696,018|
|Receivable for investments sold||1,287,801||7,727,415|
|Unrealized appreciation on swaps||52,694||179,364|
|Options (cost $51,750)||19,152||-|
|Prepaid expenses and other assets||716,981||345,722|
|Payable for investments purchased||36,918,454||21,814,819|
|Incentive allocation payable||2,694,156||-|
|Payable to the Investment Manager||280,451||109,200|
|Accrued expenses and other liabilities||2,158,495||2,685,015|
|Preferred equity facility|
|Series A preferred limited partner interests in Special Value Continuation Partners, LP;|
|$20,000/interest liquidation preference; 6,700 interests authorized, issued and outstanding||134,000,000||134,000,000|
|Accumulated dividends on Series A preferred equity facility||534,213||526,285|
|Total preferred limited partner interests||134,534,213||134,526,285|
|General Partner interest in Special Value Continuation Partners, LP||877,563||-|
|Net assets applicable to common shareholders||$||401,503,741||$||315,987,550|
|Composition of net assets applicable to common shareholders|
|Common stock, $0.001 par value; 200,000,000 shares authorized, 26,654,802 and 21,477,628|
|shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively||26,655||21,478|
|Paid-in capital in excess of par||522,441,180||444,234,060|
|Accumulated net investment income||25,069,435||22,526,179|
|Accumulated net realized losses||(62,109,479||)||(59,023,861||)|
|Accumulated net unrealized depreciation||(83,046,487||)||(91,770,306||)|
|Net assets applicable to common shareholders||$||401,503,741||$||315,987,550|
|Net assets per share||$||15.06||$||14.71|
|TCP Capital Corp.|
|Consolidated Statements of Operations (Unaudited)|
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Total investment income||17,288,371||12,110,973||48,623,309||35,011,756|
|Management and advisory fees||2,205,517||1,737,237||6,110,550||4,986,901|
|Amortization of deferred debt issuance costs||218,764||110,977||470,242||330,519|
|Legal fees, professional fees and due diligence expenses||188,284||294,746||489,488||656,522|
|Professional fees relating to the Conversion||-||-||-||411,523|
|Other operating expenses||227,287||168,903||644,793||276,766|
|Total operating expenses||3,700,392||2,507,320||9,577,689||7,248,963|
|Net investment income before taxes||13,587,979||9,603,653||39,045,620||27,762,793|
|Excise tax expense||-||-||-||502,978|
|Net investment income||13,587,979||9,603,653||39,045,620||27,259,815|
|Net realized and unrealized gain (loss) on investments and foreign currency|
|Net realized gain (loss):|
|Investments in unaffiliated issuers||804,482||8,403,999||(2,773,020||)||5,299,895|
|Investments in non-controlled affiliates||-||-||-||718,845|
|Net realized gain (loss)||804,482||8,403,999||(2,773,020||)||6,018,740|
|Net change in net unrealized appreciation/depreciation||2,132,565||(8,059,602||)||8,723,819||(13,059,404||)|
|Net realized and unrealized gain (loss)||2,937,047||344,397||5,950,799||(7,040,664||)|
|Dividends paid on Series A preferred equity facility||(364,043||)||(397,050||)||(1,131,014||)||(1,142,233||)|
|Net change in accumulated dividends on Series A|
|preferred equity facility||(23,939||)||(2,071||)||(7,928||)||(69,164||)|
|Distributions of incentive allocation to the General Partner from:|
|Net investment income||(2,639,999||)||-||(7,581,335||)||-|
|Net realized gains||(54,157||)||-||(312,598||)||-|
|Net change in reserve for incentive allocation||(533,253||)||-||(877,563||)||-|
|Net increase in net assets applicable to common|
|shareholders resulting from operations||$||12,909,635||$||9,548,929||$||35,085,981||$||19,007,754|
|Basic and diluted earnings per common share||$||0.48||$||0.44||$||1.47||N/A|
|Basic and diluted weighted average common shares|
|(1) Prior to the Conversion on April 2, 2012, the Company's portfolio had different objectives.|