BlackRock TCP Capital Corp. Reports Solid Net Investment Income for Q4 2023, Declares Dividend ...
Net Investment Income (NII): $25.3 million, or $0.44 per share, surpassing the dividend payout.
Net Asset Value (NAV): Decreased to $11.90 per share from $12.72 in the previous quarter.
Dividend: Declared a consistent dividend of $0.34 per share for the first quarter of 2024.
Portfolio: Total fair value of approximately $1.6 billion, with loans on non-accrual status representing 2.0% at fair value.
Liquidity: Available liquidity of approximately $359.0 million, including cash and available capacity under leverage program.
Merger Update: Merger with BlackRock Capital Investment Corporation anticipated to close in Q1 2024.
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On February 29, 2024, BlackRock TCP Capital Corp (NASDAQ:TCPC) released its 8-K filing, announcing its financial results for the fourth quarter and year ended December 31, 2023. The company, a specialty finance firm focusing on middle-market lending, reported a net investment income of $25.3 million, or $0.44 per share, which covered the dividend paid and marked the 47th consecutive quarter of dividend coverage. However, TCPC also experienced a net decrease in net assets from operations amounting to $13.3 million, or $0.23 per share, for the quarter.
Financial Performance and Challenges
Despite a solid net investment income, TCPC's net asset value per share decreased to $11.90 at the end of December 2023, down from $12.72 at the end of the previous quarter. This decline was primarily attributed to unrealized losses on certain portfolio positions, which the company emphasized were idiosyncratic and not indicative of broader portfolio issues. The overall credit quality remains solid, and the company is confident in its strategic investments and the upcoming merger with BlackRock Capital Investment Corporation, which is expected to create scale and operational efficiencies.
Portfolio and Investment Activity
TCPC's investment portfolio consisted of debt and equity positions in 142 companies, with a total fair value of approximately $1.6 billion. The portfolio was predominantly composed of senior secured debt, with 95.6% of the debt investments being floating rate. The weighted average annual effective yield of the debt portfolio was approximately 14.1%. During the quarter, TCPC invested $40.6 million across six investments and received $42.2 million from sales or repayments.
Liquidity and Capital Resources
TCPC reported available liquidity of approximately $359.0 million, including cash and available capacity under its leverage program. The company's total debt outstanding was approximately $988.6 million, with a combined weighted-average interest rate of 4.29%. The Board of Directors re-approved a stock repurchase plan for up to $50.0 million of common stock, although no shares were repurchased during the quarter or year.
Merger Agreement and Recent Developments
The merger with BlackRock Capital Investment Corporation is a significant development, anticipated to close in the first quarter of 2024. The transaction is expected to be accretive to net investment income and provide cost synergies. In preparation for the merger, the Advisor has agreed to reduce its base management fee rate from 1.50% to 1.25% on assets up to 200% of the net asset value of the company.
Conclusion
BlackRock TCP Capital Corp's Q4 2023 results reflect a company with a strong income-generating capacity, despite facing some portfolio valuation challenges. The upcoming merger is poised to enhance the company's financial position and operational efficiency. Investors and stakeholders can look forward to potential benefits from the merger, including improved access to capital and enhanced earnings power.
For more detailed information, investors are encouraged to review the full earnings report and consider the company's performance in the context of their investment objectives.
Explore the complete 8-K earnings release (here) from BlackRock TCP Capital Corp for further details.
This article first appeared on GuruFocus.
