Exhibit 99.1
TCP CAPITAL CORP. ANNOUNCES STRONG FIRST QUARTER 2014 FINANCIAL RESULTS;
NET INVESTMENT INCOME OF $0.39 PER SHARE AND EARNINGS OF $0.50 PER SHARE;
BOARD DECLARES SECOND QUARTER REGULAR DIVIDEND OF $0.36 PER SHARE
AND SPECIAL DIVIDEND OF $0.05 PER SHARE
SANTA MONICA, Calif., May 8, 2014 – TCP Capital Corp. (“we,” “us,” “our,” “TCPC” or the “Company”), a business development company (“BDC”) (NASDAQ: TCPC), today announced its financial results for the first quarter ended March 31, 2014 and filed its Form 10-Q with the U.S. Securities and Exchange Commission.
FINANCIAL HIGHLIGHTS
| · | Net investment income for the quarter ended March 31, 2014 was $13.9 million, or $0.39 per share, after preferred dividends and $0.10 per share in incentive compensation on net investment income. |
| · | Net increase in net assets resulting from operations for the quarter ended March 31, 2014 was $18.1 million, or $0.50 per share. |
| · | Net Asset Value per share at March 31, 2014 increased to $15.32 per share from $15.18 at December 31, 2013. |
| · | Total acquisitions during the quarter ended March 31, 2014 were $110.4 million and total acquisitions net of total dispositions were $43.5 million. |
| · | In April, we received an SBIC license from the Small Business Administration. We expect to receive a leverage commitment from the SBA shortly, which will provide access to another source of attractively priced capital. |
| · | On May 1, 2014, Todd Jaquez-Fissori joined as a Managing Director. Todd will head our energy technology group, which is a strategic extension of our platform into a rapidly growing sector. |
| · | On May 8, 2014, our board of directors declared a second quarter regular dividend of $0.36 per share and a special dividend of $0.05 per share. Both dividends are payable on June 30, 2014 to shareholders of record as of June 18, 2014. |
“We are very pleased with our results for the quarter ended March 31, 2014,” said TCP Capital Corp.’s Chairman and CEO, Howard Levkowitz. “We were able to out earn our dividend run rate by $0.03 per share for the quarter while increasing our NAV by $0.14 per share. In addition, we increased the value of our investment portfolio to $816 million from $766 million while maintaining strong credit quality. So far in the secon quarter, we see a strong pipeline of deal flow across a variety of sectors, and we will continue to take a highly selective approach to choosing investments that deliver strong risk-adjusted returns to our shareholders.”
PORTFOLIO AND INVESTMENT ACTIVITY
As of March 31, 2014, our investment portfolio consisted of debt and equity positions in 70 portfolio companies with a total fair value of approximately $815.7 million. Debt positions represented approximately 96% of the portfolio fair value, 99% of which were senior secured debt. Equity positions represented approximately 4% of our investment portfolio.
As of March 31, 2014, the weighted average annual effective yield of our debt portfolio was approximately 10.8%.(1) As of March 31, 2014, approximately 73% of our debt portfolio at fair value had floating interest rates, approximately 93% of which had interest rate floors, and approximately 27% of our debt portfolio had fixed interest rates. As of March 31, 2014, we had no debt investments on non-accrual status.
During the three months ended March 31, 2014, we invested approximately $110 million in eight new and three existing portfolio companies. The investments were comprised of approximately $86 million in senior secured loans and $24 million in senior secured notes. Additionally, we received proceeds from sales and repayments of investment principal of approximately $67 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 March 31, 2014, total assets were $857.4 million, net assets applicable to common shareholders was $554.7 million and net asset value per share was $15.32, as compared to $803.3 million, $549.6 million, and $15.18 per share, respectively on December 31, 2013.
CONSOLIDATED RESULTS OF OPERATIONS
Total investment income for the three months ended March 31, 2014 was approximately $22.7 million, or $0.63 per share, including $0.05 per share from dividend income, $0.01 per share from prepayment income, 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 March 31, 2014 were approximately $4.9 million, or $0.13 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 $3.5 million, or $0.10 per share and an increase in the reserve for incentive compensation of $1.0 million, or $0.03 per share. Excluding incentive compensation, annualized second quarter expenses, including all costs of leverage (both interest expense and preferred dividends), were 3.8% of average net assets.
Net investment income for the three months ended March 31, 2014 was approximately $17.8 million, or $0.49 per share, before related incentive compensation and preferred dividends. Net investment income after related incentive compensation and preferred dividends was $13.9 million, or $0.39 per share.
Net realized losses for the three months ended March 31, 2014 were $6.8 million, or $0.19 per share, primarily due to the disposition of our investment in ESP Holdings, Inc. (“ESP”), an investment made prior to our initial public offering as part of our legacy distressed strategy and which has yielded significant income over many years. During the three months ended March 31, 2014, we recognized $12.0 million, or $0.33 per share, in net unrealized appreciation from the reversal of the unrealized on ESP and mark to market appreciation throughout our portfolio. Net realized and unrealized gains for the three months ended March 31, 2014 were $5.2 million, or $0.14 per share.
Net increase in net assets applicable to common shareholders resulting from operations for the three months ended March 31, 2014 was $18.1 million, or $0.50 per share.
(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.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2014, available liquidity was approximately $135.7 million, comprised of approximately $26.7 million in cash and cash equivalents (net of approximately $0.4 million in net outstanding commitments), and $109 million in available capacity under the credit facilities.
Total leverage outstanding at March 31, 2014 was $291.0 million, comprised of $157.0 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 March 31, 2014 was 1.35%.
| Leverage Program ($400 million): | Rate | Maturity |
| $116mm Partnership Credit Facility | LIBOR + 0.44% | July 2016 |
| $150mm TCPC Funding Credit Facility | LIBOR + 2.50% | May 2017 |
| $134mm Preferred Equity Facility | LIBOR + 0.85% | July 2016 |
In connection with the receipt of an SBIC license as discussed below, we also anticipate adding up to $150 million of leverage through 10-year loans issued by the SBA.
RECENT DEVELOPMENTS
On April 22, 2014, the Company’s wholly owned subsidiary, TCPC SBIC, LP, received a license from the SBA to operate as a small business investment company under the provisions of Section 301(c) of the Small Business Investment Act of 1958.
On May 8, 2014, the Company’s board of directors declared a second quarter regular cash dividend of $0.36 per share and a special dividend of $0.05 per share. Both dividends are payable on June 30, 2014 to stockholders of record as of the close of business on June 18, 2014.
CONFERENCE CALL AND WEBCAST
TCP Capital Corp. will host a conference call on Thursday, May 8, 2014 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 28367088 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 First Quarter 2014 Investor Presentation under Events and Presentations. The conference call will be webcast simultaneously in the investor relations section of our website athttp://investors.tcpcapital.com/. An archived replay of the call will be available approximately two hours after the live call, through May 15, 2014. For the replay, please visithttp://investors.tcpcapital.com/events.cfmor dial (855) 859-2056. For international replay, please dial (404) 537-3406. For all replays, please reference program ID number 28367088.
TCP Capital Corp.
Consolidated Statements of Assets and Liabilities
| | | | |
| | | | March 31, 2014 | | | | December 31, 2013 | |
| | | | (unaudited) | | | | | |
| Assets | | | | | | | | |
| Investments, at fair value: | | | | | | | | |
| Companies less than 5% owned (cost of $741,804,363 and $684,569,508, respectively) | | $ | 744,016,378 | | | $ | 678,326,915 | |
| Companies 5% to 25% owned (cost of $54,759,445 and $73,946,547, respectively) | | | 53,487,621 | | | | 69,068,808 | |
| Companies more than 25% owned (cost of $41,985,865 and $42,588,724 respectively) | | | 18,153,749 | | | | 18,867,236 | |
| Total investments (cost of $838,549,673 and $801,104,779, respectively) | | | 815,657,748 | | | | 766,262,959 | |
| | | | | | | | | |
| Cash and cash equivalents | | | 27,141,436 | | | | 22,984,182 | |
| Accrued interest income: | | | | | | | | |
| Companies less than 5% owned | | | 8,279,978 | | | | 6,282,353 | |
| Companies 5% to 25% owned | | | 679,599 | | | | 415,061 | |
| Companies more than 25% owned | | | 38,519 | | | | 41,691 | |
| Deferred debt issuance costs | | | 3,360,310 | | | | 2,969,085 | |
| Receivable for investments sold | | | 1,031,717 | | | | 3,605,964 | |
| Options (cost $51,750) | | | 8,605 | | | | 14,139 | |
| Prepaid expenses and other assets | | | 1,184,123 | | | | 753,768 | |
| Total assets | | | 857,382,035 | | | | 803,329,202 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Debt | | | 157,000,000 | | | | 95,000,000 | |
| Incentive allocation payable | | | 3,486,403 | | | | 3,318,900 | |
| Payable for investments purchased | | | 1,514,602 | | | | 14,706,942 | |
| Payable to the Investment Manager | | | 463,629 | | | | 1,121,108 | |
| Interest payable | | | 332,040 | | | | 430,969 | |
| Unrealized depreciation on swaps | | | 300,684 | | | | 331,183 | |
| Accrued expenses and other liabilities | | | 2,915,706 | | | | 3,136,010 | |
| Total liabilities | | | 166,013,064 | | | | 118,045,112 | |
| | | | | | | | | |
| 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; 6,700 interests authorized, issued and outstanding | | | 134,000,000 | | | | 134,000,000 | |
| Accumulated dividends on Series A preferred equity facility | | | 493,757 | | | | 504,252 | |
| Total preferred limited partner interests | | | 134,493,757 | | | | 134,504,252 | |
| | | | | | | | | |
| Non-controlling interest | | | | | | | | |
| General Partner interest in Special Value Continuation Partners, LP | | | 2,204,587 | | | | 1,168,583 | |
| | | | | | | | | |
| Net assets applicable to common shareholders | | $ | 554,670,627 | | | $ | 549,611,255 | |
| | | | | | | | | |
| Composition of net assets applicable to common shareholders | | | | | | | | |
| Common stock, $0.001 par value; 200,000,000 shares authorized, 36,200,020 and | | | | | | | | |
| 36,199,916 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively | | | 36,200 | | | | 36,200 | |
| Paid-in capital in excess of par | | | 667,843,737 | | | | 667,842,020 | |
| Accumulated net investment income | | | 24,929,736 | | | | 24,016,095 | |
| Accumulated net realized losses | | | (112,595,624 | ) | | | (105,800,278 | ) |
| Accumulated net unrealized depreciation | | | (23,338,835 | ) | | | (35,314,199 | ) |
| Non-controlling interest | | | (2,204,587 | ) | | | (1,168,583 | ) |
| Net assets applicable to common shareholders | | $ | 554,670,627 | | | $ | 549,611,255 | |
| | | | | | | | | |
| Net assets per share | | $ | 15.32 | | | $ | 15.18 | |
| | | | | | | | | |
TCP Capital Corp.
Consolidated Statements of Operations (Unaudited)
| | | Three Months Ended March 31, | |
| | | 2014 | | | 2013 | |
| | | | | | | |
| Investment income | | | | | | | | |
| Interest income: | | | | | | | | |
| Companies less than 5% owned | | $ | 18,140,743 | | | $ | 15,240,367 | |
| Companies 5% to 25% owned | | | 1,336,864 | | | | 893,512 | |
| Companies more than 25% owned | | | 257,627 | | | | 330,317 | |
| Dividend income: | | | | | | | | |
| Companies 5% to 25% owned | | | 1,968,748 | | | | - | |
| Other income: | | | | | | | | |
| Companies less than 5% owned | | | 634,733 | | | | 157,533 | |
| Companies 5% to 25% owned | | | 121,039 | | | | 101,103 | |
| Companies more than 25% owned | | | 208,890 | | | | 142,911 | |
| Total investment income | | | 22,668,644 | | | | 16,865,743 | |
| Operating expenses | | | | | | | | |
| Management and advisory fees | | | 2,886,208 | | | | 1,964,738 | |
| Interest expense | | | 456,861 | | | | 136,407 | |
| Amortization of deferred debt issuance costs | | | 372,755 | | | | 108,564 | |
| Administrative expenses | | | 256,806 | | | | 167,808 | |
| Legal fees, professional fees and due diligence expenses | | | 204,156 | | | | 139,052 | |
| Commitment fees | | | 191,199 | | | | 22,589 | |
| Director fees | | | 85,712 | | | | 71,809 | |
| Insurance expense | | | 53,900 | | | | 36,273 | |
| Custody fees | | | 50,807 | | | | 29,419 | |
| Other operating expenses | | | 319,586 | | | | 192,971 | |
| Total operating expenses | | | 4,877,990 | | | | 2,869,630 | |
| Net investment income | | | 17,790,654 | | | | 13,996,113 | |
| | | | | | | | | |
| Net realized and unrealized gain (loss) on investments and foreign currency | | | | |
| Net realized gain (loss): | | | | | | | | |
| Investments in companies less than 5% owned | | | (6,795,721 | ) | | | 517,658 | |
| Investments in companies 5% to 25% owned | | | 375 | | | | - | |
| Net realized gain (loss) | | | (6,795,346 | ) | | | 517,658 | |
| | | | | | | | | |
| Net change in net unrealized appreciation/depreciation | | | 11,975,364 | | | | 1,837,731 | |
| Net realized and unrealized gain | | | 5,180,018 | | | | 2,355,389 | |
| | | | | | | | | |
| Dividends on Series A preferred equity facility | | | (369,135 | ) | | | (393,413 | ) |
| Net change in accumulated dividends on Series A | | | | | | | | |
| preferred equity facility | | | 10,495 | | | | 16,011 | |
| Distributions of incentive allocation to the General Partner from: | | | | | | | | |
| Net investment income | | | (3,486,403 | ) | | | (2,723,742 | ) |
| Net change in reserve for incentive allocation | | | (1,036,004 | ) | | | (471,078 | ) |
| Net increase in net assets applicable to common shareholders resulting from operations | | $ | 18,089,625 | | | $ | 12,779,280 | |
| Basic and diluted earnings per common share | | $ | 0.50 | | | $ | 0.60 | |
| Basic and diluted weighted average common shares outstanding | | | 36,199,917 | | | | 21,477,628 | |
| | | | | | | | | |
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, visitwww.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 atwww.sec.gov and the company's website atwww.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 registration statement filed on Form N-2 dated March 18, 2014and 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 atwww.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.
SOURCE:
TCP Capital Corp.
CONTACT
TCP Capital Corp.
Jessica Ekeberg
310-566-1094
investor.relations@tcpcapital.com
