BlackRock TCP Capital Corp. (“TCPC”) (NASDAQ: TCPC) and
BlackRock Capital Investment Corporation (“BCIC”) (NASDAQ: BKCC)
today announced that they have entered into a definitive agreement
pursuant to which BCIC will merge with and into a wholly owned,
indirect subsidiary of TCPC, subject to shareholder approval and
customary closing conditions. Following the merger, TCPC will
continue to trade on the Nasdaq Global Select Market under the
ticker symbol “TCPC” and the surviving entity will continue as a
subsidiary of TCPC.
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In connection with and in support of the transaction, TCPC’s
advisor, a wholly-owned, indirect subsidiary of BlackRock, Inc.,
has agreed to the following shareholder-friendly actions: (1) a
reduction in the base management fee rate from 1.50% to 1.25% on
assets equal to or below 200% of the net asset value of TCPC (for
the avoidance of doubt, the base management fee rate on assets that
exceed 200% of the net asset value of TCPC would remain 1.00%) with
no change to the basis of the calculation; (2) a waiver of all or a
portion of its advisory fees to the extent the adjusted net
investment income of TCPC on a per share basis (determined by
dividing the adjusted net investment income of TCPC by the weighted
average outstanding shares of TCPC during the relevant quarter) is
less than $0.32 per share in any of the first four (4) fiscal
quarters ending after the closing of the transaction (the first of
which will be the quarter in which the closing occurs unless it is
the last day of the quarter) to the extent there are sufficient
advisory fees to cover such deficit; and (3) coverage of 50% of
merger transaction costs for both TCPC and BCIC, up to a combined
cap of $6 million (or, if closing of the transaction does not occur
because the requisite approval of TCPC or BCIC shareholders was not
obtained, up to a combined cap of $3 million).
Rajneesh Vig, Co-Head of US Private Capital (“USPC”) for
BlackRock, and Chairman and CEO of BlackRock TCP Capital Corp.,
said “We are very excited to announce the transaction between
BlackRock TCP Capital Corp. and BlackRock Capital Investment
Corporation. This is an opportune time to combine our companies.
With BCIC having successfully transformed its portfolio, our
investment portfolios are now closely aligned. We believe this
transaction positions the combined companies for sustained growth
and will create meaningful value for the shareholders of both
companies. As a larger BDC post-merger, we expect to benefit from
better and more efficient access to capital, improved trading
dynamics and combined operating efficiencies.”
James Keenan, Chief Investment Officer and Global Head of
Private Debt for BlackRock, and Interim CEO of BlackRock Capital
Investment Corporation, said “This transaction continues our
commitment to build a best-in-class platform that offers clients
products and solutions to capitalize on the expanding opportunities
in private debt. Over the past 20 years, BlackRock has built
leading private debt capabilities to help our clients achieve their
investment objectives by aligning our proven investment excellence
with long-term market opportunities. This merger is a strategic
next step in the growth and evolution of our business development
company platform, which is an important part of our Global Private
Debt business.”
Under the terms of the proposed merger agreement, in connection
with the merger of BCIC into an indirect, wholly-owned subsidiary
of TCPC, BCIC shareholders will receive newly issued shares of TCPC
common stock based on the ratio (the “Exchange Ratio”) of the BCIC
Net Asset Value (“NAV”) per share divided by the TCPC NAV per
share, each determined shortly before closing. The Exchange Ratio
will result in an ownership split of the combined company based on
the proportional NAVs of TCPC and BCIC.
Key Transaction Highlights
- Enhanced scale – The combined company will have enhanced
scale and a larger asset base, including total assets of
approximately $2.4 billion, and net assets of approximately $1.1
billion, based on June 30, 2023 financials.
- Improved access to capital – As a larger entity, the
combined company is expected to have better access to capital,
including the potential to access debt financing on more favorable
terms.
- Operating synergies – The merger is expected to drive
meaningful operating synergies via the elimination or reduction of
redundant expenses.
- Investor-aligned fee structure – Upon the completion of
the merger, the advisor has agreed to reduce the base management
fee rate from 1.50% to 1.25% on assets equal to or below 200% of
the net asset value of TCPC with no change to the basis of the
calculation. Additionally, TCPC’s 17.5% incentive fee will continue
to be subject to a cumulative 7% total return hurdle.
- Accretive to NII – The merger is expected to drive
accretion of net investment income over time through reduced
management fees, lower combined operating expenses and
opportunities to grow the portfolio through combined leverage
capacity.
- Diversified portfolio with significant overlap – With
87% of BCIC’s portfolio overlapping with the TCPC portfolio and 68%
of TCPC’s portfolio overlapping with the BCIC portfolio, in each
case based on fair market value as of June 30, 2023, the combined
portfolio is expected to be substantially similar, emphasizing
portfolio diversity, income-generation and seniority in the capital
structure. On a pro-forma basis, as of June 30, 2023, the combined
company had investments in 156 portfolio companies, 90% of which
were in senior secured debt.
- Experienced direct lending team – BlackRock’s USPC team,
with more than 23 years’ experience in direct lending across
multiple market cycles, will continue to manage the combined
company’s portfolio and investments post-merger, as they have been
doing for both companies on a standalone basis.
- Positioned for enhanced growth and returns – This
transaction positions the combined company to better capitalize on
the current lender-friendly investment environment to originate new
loans with attractive spreads and lender protections.
Prior to the anticipated closing, each of TCPC and BCIC
currently intends to maintain its usual course of declaring and
paying quarterly dividends and, to the extent necessary, will
declare any special distributions required to distribute sufficient
taxable income to continue to comply with its regulated investment
company status.
The combined company will continue to be externally managed by
its advisor, a wholly-owned, indirect subsidiary of BlackRock,
Inc.
Consummation of the proposed merger is subject to TCPC and BCIC
shareholder approvals, HSR Act approval and satisfaction of other
customary closing conditions. Assuming satisfaction of these
conditions, the transaction is expected to close in the first
quarter of 2024.
Houlihan Lokey Capital, Inc. served as financial advisor and
Dechert LLP as the legal counsel to the special committee of TCPC.
Keefe, Bruyette & Woods, a Stifel Company, served as financial
advisor and Vedder Price P.C. served as the legal counsel to the
special committee of BCIC. Skadden, Arps, Slate, Meagher & Flom
LLP served as legal counsel to the advisors of TCPC and BCIC.
Conference Call
BlackRock TCP Capital Corp. and BlackRock Capital Investment
Corporation will host a conference call at 10:00 a.m. Eastern Time
(7:00 a.m. Pacific Time) on Thursday, September 7, 2023, to discuss
the transaction.
All interested parties are invited to participate in the
conference call by dialing (833) 470-1428 international callers
should dial (404) 975-4839. All participants should reference the
access code 403292. The conference call will be webcast
simultaneously in the investor relations sections of TCPC’s and
BCIC’s websites at http://investors.tcpcapital.com and
https://www.blackrockbkcc.com/investors.
A joint investor presentation containing a discussion of this
transaction will be referenced on the conference call and has been
posted to the investor relations section of the TCPC and BCIC
websites and filed with the Securities and Exchange Commission (the
“SEC”).
An archived replay of the call will be available approximately
two hours after the live call, through September 14, 2023. For the
replay, please visit
https://investors.tcpcapital.com/events-and-presentations or
https://www.blackrockbkcc.com/investors/news-and-events/webcasts-and-events
or dial (866) 813-9403. For international replay, please dial (929)
458-6194. For all replays, please reference access code 125467.
ABOUT BLACKROCK TCP CAPITAL CORP.
BlackRock TCP Capital Corp. (NASDAQ: TCPC) is a specialty
finance company focused on direct 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, a wholly-owned, indirect
subsidiary of BlackRock, Inc. For more information, visit
www.tcpcapital.com.
ABOUT BLACKROCK CAPITAL INVESTMENT CORPORATION
Formed in 2005, BlackRock Capital Investment Corporation
(NASDAQ: BKCC) is a business development company that provides debt
and equity capital to middle-market companies. BCIC’s investment
objective is to generate both current income and capital
appreciation through debt and equity investments. BCIC invests
primarily in middle-market companies in the form of senior debt
securities and loans, and the investment portfolio may include
junior secured and unsecured debt securities and loans, each of
which may include an equity component. BCIC is a publicly-traded
BDC, regulated under the Investment Company Act of 1940 and is
externally managed by its advisor, a wholly-owned, indirect
subsidiary of BlackRock, Inc. For more information, visit
www.blackrockbkcc.com.
FORWARD-LOOKING STATEMENTS
Some of the statements in this press release constitute
forward-looking statements because they relate to future events,
future performance or financial condition of BCIC or TCPC or the
merger of BCIC with and into a wholly owned, indirect subsidiary of
TCPC (the “Merger”). The forward-looking statements may include
statements as to: future operating results of BCIC and TCPC and
distribution projections; business prospects of BCIC and TCPC and
the prospects of their portfolio companies; and the impact of the
investments that BCIC and TCPC expect to make. In addition, words
such as “anticipate,” “believe,” “expect,” “seek,” “plan,”
“should,” “estimate,” “project” and “intend” indicate
forward-looking statements, although not all forward-looking
statements include these words. The forward-looking statements
contained in this press release involve risks and uncertainties.
Certain factors could cause actual results and conditions to differ
materially from those projected, including the uncertainties
associated with (i) the timing or likelihood of the Merger closing;
(ii) the expected synergies and savings associated with the Merger;
(iii) the ability to realize the anticipated benefits of the
Merger, including the expected accretion to net investment income
and the elimination or reduction of certain expenses and costs due
to the Merger; (iv) the percentage of BCIC and TCPC stockholders
voting in favor of the proposals submitted for their approval; (v)
the possibility that competing offers or acquisition proposals will
be made; (vi) the possibility that any or all of the various
conditions to the consummation of the Merger may not be satisfied
or waived; (vii) risks related to diverting management’s attention
from ongoing business operations; (viii) the risk that stockholder
litigation in connection with the Merger may result in significant
costs of defense and liability; (ix) changes in the economy,
financial markets and political environment, including the impacts
of inflation and rising interest rates; (x) risks associated with
possible disruption in the operations of BCIC and TCPC or the
economy generally due to terrorism, war or other geopolitical
conflict (including the current conflict between Russia and
Ukraine), natural disasters or public health crises and epidemics;
(xi) future changes in laws or regulations (including the
interpretation of these laws and regulations by regulatory
authorities); (xii) conditions in BCIC’s and TCPC’s operating
areas, particularly with respect to business development companies
or regulated investment companies; and (xiii) other considerations
that may be disclosed from time to time in BCIC’s and TCPC’s
publicly disseminated documents and filings. BCIC and TCPC have
based the forward-looking statements included in this press release
on information available to them on the date hereof, and they
assume no obligation to update any such forward-looking statements.
Although BCIC and TCPC undertake no obligation to revise or update
any forward-looking statements, whether as a result of new
information, future events or otherwise, you are advised to consult
any additional disclosures that they may make directly to you or
through reports that BCIC and TCPC in the future may file with the
SEC, including the Joint Proxy Statement and the Registration
Statement (each as defined below), annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the Merger, BCIC and TCPC plan to file with
the SEC and mail to their respective stockholders a joint proxy
statement on Schedule 14A (the “Joint Proxy Statement”), and TCPC
plans to file with the SEC a registration statement on Form N-14
(the “Registration Statement”) that will include the Joint Proxy
Statement and a prospectus of TCPC. The Joint Proxy Statement and
the Registration Statement will each contain important information
about BCIC, TCPC, the Merger and related matters. This press
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or
approval. No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act. STOCKHOLDERS OF BCIC AND TCPC ARE URGED TO READ THE JOINT
PROXY STATEMENT AND REGISTRATION STATEMENT, AND OTHER DOCUMENTS
THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT BCIC, TCPC, THE MERGER AND RELATED
MATTERS.
Investors and security holders will be able to obtain the
documents filed with the SEC free of charge at the SEC’s website,
http://www.sec.gov and, for documents filed by TCPC, from TCPC’s
website at http://www.tcpcapital.com and, for documents filed by
BCIC, from BCIC’s website at http://www.blackrockbkcc.com.
PARTICIPANTS IN THE SOLICITATION
BCIC, its directors, certain of its executive officers and
certain employees and officers of BlackRock Capital Investment
Advisors, LLC and its affiliates may be deemed to be participants
in the solicitation of proxies in connection with the Merger.
Information about the directors and executive officers of BCIC is
set forth in its proxy statement for its 2023 Annual Meeting of
Stockholders, which was filed with the SEC on March 15, 2023. TCPC,
its directors, certain of its executive officers and certain
employees and officers of Tennenbaum Capital Partners, LLC and its
affiliates may be deemed to be participants in the solicitation of
proxies in connection with the Merger. Information about the
directors and executive officers of TCPC is set forth in its proxy
statement for its 2023 Annual Meeting of Stockholders, which was
filed with the SEC on April 6, 2023. Information regarding the
persons who may, under the rules of the SEC, be considered
participants in the solicitation of the BCIC and TCPC stockholders
in connection with the Merger will be contained in the Joint Proxy
Statement when such document becomes available. These documents may
be obtained free of charge from the sources indicated above.
NO OFFER OR SOLICITATION
This press release is not, and under no circumstances is it to
be construed as, a prospectus or an advertisement and the
communication of this press release, and under no circumstances is
it to be construed as, an offer to sell or a solicitation of an
offer to purchase any securities in BCIC, TCPC or in any fund or
other investment vehicle managed by BlackRock or any of its
affiliates.
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version on businesswire.com: https://www.businesswire.com/news/home/20230906556090/en/
BlackRock TCP Capital Corp. Katie McGlynn 310.566.1094
investor.relations@tcpcapital.com
BlackRock Capital Investment Corporation Nik Singhal
212.810.5427
Press: Christopher Beattie 646.231.8518
BlackRock TCP Capital (NASDAQ:TCPC)
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