TCPC - Earnings call transcript Q4 2017 | BlackRock TCP Capital Corp.

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Operator

Ladies and gentlemen, good afternoon. Welcome everyone to TCP Capital Corp. Fourth Quarter and Full Year 2017 Earnings Conference Call. Today's conference call is being recorded for replay purposes.

During the presentation, all participants will be in a listen-only mode. follow formal will session question-and-answer the remarks. Company's A will call of over Instructions] Corp. And Katie the I now, President [Operator to turn McGlynn, TCP Vice Global Investor Relations team. Katie, proceed. please

Katie McGlynn

Thank you, Valerie.

conference would the performance. on and of statements assumptions the note begin, and statements at estimates like management of we contain forward-looking I that Before future this time call of are may based guarantees to such not

this risks notice. forward-looking to differ involve statements on are materially quarter statements year December and Any earnings those projected. change we and actual of could Forward-looking as ended fourth our uncertainties XX, results from subject made for today This call made are the XXXX. release full issued and and morning, without

Web-site will the presentation Presentations. turn the Events and at over tcpcapital.com. We I to a refer Investor Howard select to now Levkowitz. our also please posted To which Relations slide our supplemental click we & today's will to earnings call, on and on CEO, call link view the Chairman presentation

Howard M. Levkowitz

and you call for everyone today. thank to participating our on Katie, Thanks,

Slide market our perspective To the will Please review financial questions. not of to X After of results. on call. and met to will key on I of overview then who I for her take pleased accomplishments our begin we have provide Paul presentation. other review the us yet beginning for team and those For joined are our Katie then our McGlynn, year with here with an some Davis, of have XXXX. we our CFO, XXXX at the TCPC you members she Paul's of comments, we turn will begin, will accomplishments this your and our will key

paid part totaling continues dividend a be we per to return our First, shareholders. $X.XX share. In XXXX, of our dividends key total to

$X.XX the the each per since We for the as In have XX by outearned we cover year dividend XX%. of continue our dividends, XXXX, done we inception. share or quarters to our

Second, deployment competitive resulting environment, deployments million, continue despite market $XXX million. during total to levels investment in we XXXX. of find deployed in million the a dispositions attractive $XXX record of year, of $XXX despite We the net opportunities, driving record of

to as extent Tennenbaum basis, period, investment pipeline Slide opening X. equity our attractive we terms. a the Third, month, grade financing office on rating, declines this we investments and and reaffirmed Wells continued the quality since and Partners, our with debt our Capital by investment meeting, recent senior Fargo repurchase presence operations strengthens to our investment Business of share most structure portfolio. of on in shareholder-friendly And nearly our raise our outperforming renewed Fourth, our our for plan Index diversified of new broadly Fifth, which which finally, Board Board XX% return S&P focused on NAV. further total secured expand geographic over prudently Atlanta, below its Directors our to advisor, cumulative $XX IPO, the XX% opportunities. to of and Company Sixth, $XX returned Development reflecting at stock million, shown a last conservative leverage of up the provides continued our repurchases on investment million

resulting quarter for our million, the Now, we Dispositions of fourth $X were of demonstrating net onto another fourth shrink million. quarter to sheet balance appropriate. the $XXX quarter; delivered in quarter, highlights from strong willingness million, in our totaling dispositions originations when the $XXX

March as our share per of As payable quarter $X.XX share, share, Slide income XX. to and dividend investment of we dividend outearning of holders per of on $X.XX X, XX net today record we first shown declared on by per earned a March $X.XX

presentation, our to X. viewing Slide please turn those For

market fair quarter hold end, portfolio invested variety had to value in billion, in industries. diverse XX $X.X continue At wide across investments. of companies of portfolio, of a a excess We a our was which

our of position portfolio largest X.X% the positions the only only represents and largest five together represent of Our XX.X% portfolio.

can vast of senior instruments. were assets on the quarter majority you X, debt secured end at our see As Slide

investments Slide In at on XXXX. addition, approximately X, of XX% as of shown our up floating-rate, were debt beginning the from XX%

our the investments for have higher which increase, is accordingly. potentially have continues rise enhanced We benefit providing reset, from our expect liabilities. quarters significant fixed-rate discussed of our potential positioned the to interest for in rates a future portfolio we number to years to and floating LIBOR as rate upside by predominantly To rates extent

fourth include in investments deployed $XXX one senior in new existing in companies. portfolio but all of we investments, million which three quarter were companies ten XX, Slide XX to These the Turning secured. and

companies existing source borrower to of deliver in and strong reflect investment the important value an opportunities portfolio investments we them. Our continue and relationships be to our

million They Caribbean to five commitment our rural senior $XX broadband the Our to include; secured loan million secured and loan Lithium company top Technologies, $XX to of American intelligence senior provider secured the investments social a to have software; and provider million loan senior to Domo, business data provider continuity secured Broadband, in $XX Financial, a of the management a top markets. of quarter and million we in asset-backed in visualization; tools Datto, $XX company data maintaining a services; consumer structure. of lending million specializing XXXX; protection a and a loan reinforce an a services lending third a cable a data capital portfolio note and financed since management media senior at $XX diversified to a which telephone

repayment spread the insurance, In the in retail ABL of deal. aggregate were payoffs and to $XX and the including International. an the million of $XX dispositions fourth million of Financial the $XX loans to investments quarter, $XXX of million NILCO, million of our included Caribbean a variety quarter other payoff manufacturing, Our across loan of industries of Asset fourth a notes,

flexibility the ability experience unique NILCO and industry. a repaid was which our example in to investor building a family-run that in a of fourth-generation a good company acquired structured a was leverage deep with products We at knowledge source industry a term by Our and by investment our deals. strategic was in provided structure premium. loan distributor and buyout. relationships NILCO to The products needed prior acquired the first with borrower loan our was building the ultimately our company, the leveraging lien provides

exited New average of effective the the and weighted average the had had investments XX.X%. weighted investments XX% in a yield yield quarter during effective a quarter of we

end the increase on portfolio as effective overall yield the newer lower at slightly loans. at Our rate remained quarter offset LIBOR effectively XX% in

be pricing generate our to we competitive the able pleased consistently yields on continue strong environment, Given are to investments. to very

the to will will Paul? turn I Paul, Now, results. quarter discuss financial call over who our fourth

Paul L. Davis

dividends incentive and investment hello dividend share, $X.XX. Since our compensation recurring an XX, that $X.XX $X.XX or basis, Howard, income $X.XX outearning net substantially which or the quarter $X.XX share discount every income, $X.XX above and at $XX.X by income for year. and Investment came was amount. On income investment including Slide our from on remaining aggregate $X.XX The interest of was of million share OID cash per per was our continues $X.XX, exit have per Thanks, quarter after per dividends was after dividend was since unamortized annual $X.XX the prepayment net per share, recurring compensation share, per of This $X.XX, the everyone. six-year Starting IPO, incentive $X.XX we an IPO. $X.XX income amortization covering nearly and outearned per fees income our of prepayment fee and of our share recurring was for Interest of our record year-end. share. fees. PIK comprised

We share earned per $X.XX other income. of also

million Our compensation. for $X.XX investment our of other Operating time and of million million of and $X.XX losses of as was total the per investment it Green Net realized before of X%. conservative $X.XX related were of our continued share investment $X.XX million at down. unrealized or markdowns investment hurdle share marked our losses exceed the comprised Biologics, net are of of life generally loan. the on compensation per $X.XX primarily XX% $X.X Contextmedia per of expenses expenses share million is policy interest incentive share included income than previously Realized per an $X.X $X.X income, $XX.X per recognizing rather to on performance total our over of debt recognition of the million of all-in to reorganization Real net Incentive amortizing made. been $X.X the or economics had follows upfront share sale all and of of of comprised $X.X primarily income cumulative Mex, which rate Globecomm, on return

at marked discussed and quarter in Our non-accrual with end, one which credit only remained quality zero. we Mex a on which loan past the have to at continues loan be to Real strong

SBA Slide leverage quarter liquidity million, and This of million pending Available $XXX.X available $XXX.X leverage of less Turning $XX.X $XX.X and our $XX of million is settlements X.XXx total million. was on leveraged of on of to remaining quarter. we closed cash and Regulatory debt, which million equity $XXX million. outstanding the basis cash net XX, million the during net includes includes cash gross equivalents SBA. drew with a of quarter another SBIC leverage commitment down at $X the and end, net the trades. from X.XXx leverage We of common

plus And the through $XXX XXXX As a $XX earnings an issued our of facility credit of call, noted capacity follow-on we million in total at ING a with rate QX. our revolving our $XXX additional LIBOR with yesterday revolver Capital we par SVCP refinanced a to quarter issuance third million par on million as notes new X.XX%. of

debt We are continue and raising shareholder-friendly able be attractive pleased financing on to to terms.

to remains Our a program ATM opportunities equity, raise arise. shareholder-friendly as way

small a year. raising NAV or program our the not stock to during reactivated ATM the we With under we way, quarter, share During repurchase approximately did quarter trading XXXX, repurchase the and our judicious any $X.X our shares at million. a throughout in premium fourth

NAV. a at plus turn over a SVCP However, of in now our rates note the I'll TCPC at rate rate call X.XXX% was senior of debt notes blended first quarter quarter, our Howard. average was of back price our as At LIBOR debentures at activated SBA issuances interest combined rate unsecured and in our buyback the program share our below X.XX%. fact facility end during the to weighted X.X%, convertible effect the dipped on X.XXX%, of This and our outstanding X.XX%. funding our revolver X.XX%, and the remains reflects at and

Howard M. Levkowitz

Paul. Thanks

briefly includes values investors to our wealth these I first many cheap cover within In Today, invested four have highs this spreads financing, on transactions our to senior seeing XX, is competition, market superior range. currently of investments increasingly approximately yield combined the yield are are million, Despite have effective we and the in remain asset credit accessibility primarily all-time we given February returns $XX historical quarter of while lows, relentlessly and quarter, the we approximately well The cautious. for what downside through pipeline Now, are intense At activity our of in in protection. point market. with XX.X%. the propelled recent loans. risk-adjusted that will capital we focused both and preserving which to the generating fervour secured M&A

appropriate sheet on reasons. our shrink for focus the believe for as when prepared appropriate, several in means even fourth balance let risk-reward XXXX Our positioned we in highly TCPC during is that are competitive to market, well quarter. did a We growth we

First, we decades, multiple middle-market allowed deliver market nearly cycles. us in has companies to across consistent two returns for have investing been which

due and The key acted us today's unique deals the have relationships advantage sources this deal over provides we have the part source a we market. clubbed which investment developed. in in or to transactions developed companies, opportunities, interesting we sole as long-term time Second, of XXXX in a to deals small portfolio with either with new vast and have ability our co-lead, where majority or were relationships

protection have XXXX, than to debt Third, its exemptive borrowers our opportunity alongside to sources could investments selective we from and own. disciplined affords and to by quality focus TCPC credit co-investment and Capital's maintained more highly clients the Fifth, comprehensive a of obtained a underwriting to our variety of with diverse approach our to staying access alternatives. cost Tennenbaum equity capital and on standards. other the pursue solutions us in provide us Fourth, relief low true capital to downside our our and financing we co-invest on which provide attractively taking larger funding priced SEC,

two X.XXX% five-year credit facility into revolving of and issuance examples. this follow-on the entered are Our just we earlier notes week

Finally, with shareholders. our our aligned interests are closely

Our conservative we the origination have of one structures in income shareholder-friendly and most recognition practices the fee are industry.

open continue to invest members of continue in recently of our We market, a team TCPC number occasions, management the this Directors month. shares Board alongside as and was as as and to on of shareholders, purchase the evidenced

the same. strategy the future, our to Looking remains

We about will to performance our our sources priced for recurring while support. returns pleased In prospects please diverse earnings strong we closing, XXXX capital our thank that, performance delivering our to our and from shareholders generating on to attractively like stream, effectively continued call And would XXXX. deploying your with and We shareholders preservation. focus growth in for capital a in and are your are continue operator, questions. portfolio optimistic funding we by on optimize focusing and with our and of for confidence continued open the all achievements to

Operator

James. first of Our Dodd comes Instructions] [Operator Raymond question from Robert

Your is open. line

Robert Dodd

this today today, think kind will on year in now XX, comments, On question, sensitivity, questions. would versus environment positive Q, sheet potentially much that get A And Not in provide based of portfolio away moved how your now? yield LIBOR up. balance obviously mentioned was the XX.X, [ph] ago it but… a sensitivity in we've right few the of the we're sensitivity, presentation, obviously your How potentially, in do much upside. of the [LIBOR] it's the has actually obviously competed easy the snapshot over you rate your seen you stick

Howard M. Levkowitz

thanks question. Robert, for the

moves think I you in to this happen long we good this two ultimately We know out. are the it for the decades, to in though what majority that of being one. as do last majority vast time, and almost is the a positioned In But it which netted competition know, market. doing don't been assets, not environment. of XX% were XX% the floating-rate we've quarters, a two the should roughly, people going that opportunities, and is look try with compressing able our We this in continue spread of we've why assets see to think was maintain all benefit for things quarter, which future to and kind you unique I trying to well out, past we've spread more our think been balance be for a particularly sheet lot versus as we've despite all rate we to it's a fixed-rate we us of and our pointed almost if vast significant. very very seen

flow it Of through quarter. always When match in on is lag a course up there The timing. the asset/liability mechanical. side, over also presentation is doesn't these quarter

Robert Dodd

do is it shrinking kind it seeing going on a Do you actually to you're portfolio that. appreciate given cautious, in ball, I the right the shrank in I net quarter and said the think, Thank competitive crystal the time be you. portfolio increasingly Also is, do. you to the how pipeline, which to in aggressive based obviously the in quarter, growing what still still comment, environment be mean fourth pulling out obviously think time your think you of it time thing is I or that you first to the XXXX? are

Rajneesh Vig

the take that don't it of didn't a the competition reluctant I may as exact didn't of because lumpy XXXX sold the a you because chose do partly and to we what a just There i.e., that a the piece solution, a them but cycle financing are to when part roughly question. fair seen. nature of that versus a would count through it's lender want solution as actually in, transitional would a made of give the be XX%. were It business. had interim. It or also to you, says, and is position private repricing. clearly came view for and me lender It's a a think it We the piece versus of someone a just always there let out I right that on I of also didn't companies good go portfolio deploy. function priced a look a lot remind XXXX I Howard small club, just tends will remind have I forecast a How a caveat these in a participant, XX% partly at a first we that gets the sole to is investments competition. fair is we that companies down about think shrink lot in of good and because think the function repayments breakout where be amount. have the year-to-date, just our of of also capital else were of we that as bit But that were, the deployed XXXX Robert, a refi we And of shrank credit remains relatively, QX Raj. number participate for we because I it's year-to-date that's our business our in company you repay, exits, plays a where and I an the of where I QX we or

really majority sole an driving to degree. financing and financing think taker participant price being a So a a a we driving where we terms, versus were some lead overwhelming or structure, party

able in that's as of to view, at continue side if that's to we deploy deployment of disciplined true the and well as shrink and the form good least in we're okay to of continuously net that, in as seen, deployment think the staying kind as us drive capital ability competition the well-positioned continues forward, to even way but a point given is be remains of positioning the drives takes out partner, pricing as how that and I expands, business down or from to or If okay. to as a we're best that me our size, function long to the be it.

Robert Dodd

a One look it's outlook When the all-in, discussed through beans for there's it zero you kind I coupon, a a solo] nonaccrual [power that, but was L that, exactly on accrue, ago the nonaccrual, Okay, fair zero, you couple which basically I not non-zero But that obviously and it what's there, at revolving marked a one now, the nonaccrual feels value big obviously if the more nothing going there a because to can, what's much. got to X.X of of I me, of spilling but…? zero-coupon on on also, schedule, potential that plus about becomes one, X.XX. quarters credit asset. [ph], obviously Without appreciate is is that a color. but right. piece like Thank

Rajneesh Vig

that piece a at the and time bit of last of heels closing Let we the of the that effectuate call the on end talked about me exit operating we this restructuring the little take right and business little the that is best really of really the quarter, a earnings couple pieces way to of business, The of times. situation on what here. of isolation to think set put other and which look around It's do now QX normally and for is harvest a we ongoing at value. we that was They closed Kawa. to doing that Conergy funding restructured recovery position and the a a all in the about in Kawa are bit into of are hard beginning the securities a a restructuring to collective business of at ultimately

was to the a instrument of the the that I we which moves money have do moves as way in isolate. instrument participate credit and But interest at to So, up dollars the part has piece you're me of only have a a in because looking business, restructured but put that and bit recovery we and some rate fair down down. sort operating equity is broader of equity ownership to restructuring hard of one think

that the news thought assets. best we post was probably way to that the funding. on coming So more There's proceed

sense is in very and there the the versus through which storyline Asia assets in are exiting. based And We go I have a probably with that year. working the business predominantly as now generally we we will been it's broader the think make U.S. active more team which

Robert Dodd

quarter. I appreciate on the my and that. Thanks. questions congratulations That's

Operator

question comes Jonathan Fargo. Bock Our next Wells of from

open. line Your is

Joseph Mazzoli

good Mazzoli Good morning. Jonathan excuse afternoon. Joe today. me, Bock for Or filling in

from of first to there's kind M&A class going the question, BDC best activity of in the some consolidation platforms, and our or established XXXX TCP, think research the that think we've in certainly management will we outlined we teams that. that in benefit like So potential in be space

So, potential value? that below as something be forward asset this is, is could combinations considered net

Howard M. Levkowitz

investments It start correct. The the to first let's are was we that still in long-term continuously out With morning with California. with consistent part. strategy. that respect are good TCPC on in focused morning good our here Joe, question, is making

in sense but is and at looking think participants, really As other players that's other the respect industry and makes and to our focused. with on we term here, we the sense, and things about things what shareholders going the things seeing goal do are if where to we're make constantly over long for

Joseph Mazzoli

on up I an and Thank XXXX, Okay. slight January from K see adjustment relates into payable appreciate that question allocation year's that next Advisor. to the the a this to compensation Howard. effective that, a just January K, item XX, And existing you. incentive to profit on, year's picked fee the GP certainly X we last convert to we a to distribution structure the from

kind actually company. perspective So tax management of it we read as from seems to be negative like the that that, might a

might driving be just we're what curious kind that. of So,

Rajneesh Vig

Great question.

want sure first make amount not will to compensation affect absolutely I It computation. doesn't paid. affect services affect the receive just is we The the of the It is, the doesn't thing clear Advisor. this from

all to the capital incentive see means compensation to a fee, retain there carried to gains at as all. losses, of of from we carryforward. we simply it us that to the TCPC, that portfolio get compensation underlying allocation go with know, effects the means which those if form receive that as for tax tax capital as losses capital puts all, operating future of other all and get of there loss line company incentive use negative converts are that not interest in BDCs a you impact There It well. against now the a in I capital just the our most, use a is and TCPC. flow to a fee. If that As are the don't gains being which

see this in I once any clear, tax a our again So, from incentive TCPC But for positive impact does fairly perspective. not way. or thing neutral to a structure be as a just compensation it

to and the total back look-back the cumulative going hurdle continue retain percent to return our rate We all inception. way after just

Joseph Mazzoli

thank for Okay, Those all you. questions. very much were my you that. Thank

Operator

question Our Bahamondes George next comes Bank. from Deutsche of

open. Your line is

George Bahamondes

usual if So in repayment on higher guys activity was you XQ. I'm than repayment year-to-date wondering could provide any activity. color

Howard M. Levkowitz

don't we So, like forward-looking the details quarter or that provide interim during guidance.

you this a over way and prepayment at is best is because as do. will a to Raj back it when quarter. long If in look during income time back are I the to probably we by general But earlier, we than level period repay. of think is pointed look because look quarter really it had vary And to historically, prepayments out our lumpy, predict that of going higher entities we can't

George Bahamondes

okay. it, Got

that I if if were repurchases question, wondering year-to-date, you completed Next any. was any disclose could share

Howard M. Levkowitz

Once again, our we purchase it's up million don't we formulaic. and our note do it that reapproved has disclosures is share plan intra-quarter. Board do have, to to think $XX important I

for go an more shares acquire it's And is a so, had designed. price while, algorithm this but effect way into falls designed that's significantly. NAV the below more which is the we And driven to haven't it if by

buying very more shares. share will down buy in it shares. up we if prices many to it's are going If wind So below lower, only slightly drop NAV, not

That of this of that also time a would management members I during on the quarter. outside number of acquired shares and though Directors this note is occasions during Now, in Board public filings. our

George Bahamondes

okay. all you. Those Got questions. Thank my were it,

Operator

Securities. of Our next Testa from Christopher comes question National

is line open. Your

Chris Testa

you or guys clubbing sole on agent deal I appreciate you versus on lead the of kind are Just when the color where the are up.

Just or the is versus kind on there borrower more EBITDA of any agented sole lead average the the discernible clubbed deals wondering, between difference deals?

Rajneesh Vig

profile versus the members, I I margin us but sign don't bringing in again. members necessarily one function a have company would Raj the distinguish a the it's don't we say other. of that about the deal. it's It's club on into are mean of I study, club by sometimes company It's reciprocation sometimes really

a think wouldn't or nature So as level or or company EBITDA I about club small different the type club, necessarily. of sole

Howard M. Levkowitz

I is can look company one advantage a of just there by have thing limit internally. of to do exemptive and businesses, at we company order. add we to number that. sole our it We and what or would lead But the

we've significant are some deals whether up with going on do, Although be do to in it, people of larger syndication clubbing definition are very all. we power, there it because maybe the business deals. taking got somebody lending agenting on And risk we we're can't by we side else or what other not the of

hold so business, down the in are are in principal business, ourselves. fee we we not lending committing that We take not business, in can are the or we the out to things are than busier

Chris Testa

still to guys able pricing middle kind the sweet know write intense with your in thoughts obviously with that power? can you other market? relief, I are seeing And there kind who kind fewer that curious of exemptive middle Howard, of market Are guys. the you're market. the sticking still competition In large excited like in checks competition the be where is I you Great. there I'm upper that more people topic, spot of kind there. appreciate would core are of you're words, or just more of getting detail, the that to the

Rajneesh Vig

view at well. we as ourselves think level as upper middle some I market

to But think point, the then is model. there are versus commit I'm larger and checks, syndicate course, core people do how is that deals business broader competition, point down to discerning able just upper. you're a not sure or Of recent larger as I to Howard's

it's the are on able we've and or grown we is to our bigger and are decide competition not size deals they may refinancing say down seen that of using would I in core So and People to versus process. between that, as upper. do just checks broader-based the participate pricing distinguishing a

Chris Testa

there And how detail I if be and on? just is you could any office if Atlanta that that interested, just to you curious, opening to have of with the great. on many provide the specific Okay, going going focus any additional was there's verticals office, employees

Rajneesh Vig

a side to it less the been That and It's also is, and industries But we to individual to is we've the we What the hired there include is may feel a already sometimes on that down to and or are some resident area and way right region. the someone helpful. local clear, little wouldn't a tried local led office picked small in presence investment office. an a that the a on that's like contacts do approach – we in a over side has lot cover good include pockets coverage. over. not think may very regions, origination I find also regional having southeast time the It's be consider to opportunities. it's a of broad-based There's the

Chris Testa

it. Got

this Was migration primarily within proximity trends to that kind more States So in focus. was by there? of that geographical driven the favorable

Rajneesh Vig

say, I can and think lot I wouldn't to the broadly a There the exclusively has we But say of thinking of about the do non-sponsor lot would but region brand extend it's where businesses we and opportunities. are leverage good businesses. just that got family-owned a opportunities. footprint

Chris Testa

for all That's guys. okay. taking questions, me. my it, Thanks Got for

Operator

from Paul comes Our next KBW. Johnson question of

is open. line Your

Paul Johnson

probably leverage, it's total you've levered been at look definitely where high the means, more by unreasonably but any not you're high near I When historically. end

great. wondering where is any equity you So leverage a color pretty I are to could could do, on today, left SBIC, absence the would tell Any mean of but you in that it with there grow comfortable you issuance might higher? think bit take that us, you if room the I'm be you of little

Howard M. Levkowitz

is One year-end. $XX we thing sheet note to on our cash balance that's have at in very million important

way leverage, think we it cash at day is literally the net about unpredictable looking of a of and happens year-end cash that business you're leverage, got it flows because when the so, some timing last is of fair year. And back at amount the the including we

the than it makes And liquidity a when we do with lower our suggesting. to that you which cash as number well, you what respect so, think about lot are

comfortable here. are We

We within a comfortable are range.

at about a you the have any some an or it time of range recognize an that the unpredictable on something invest because we where to same pay maintain and and way have of get always think vice create to situation of versa. don't you incentive loan end may we at to can historically put doesn't want and we declined minimum We is, time we to level exact one artificial it the the leverage, off quarter that think

with And upper so, significant lower, most is our go our It higher leverage never of and it been it definitely can of permitted. approached sort it always than operate have cushion can is range. a around little a with moved comfortable we're where of is. very But be where where in It's end a existence. the and it's we certainly what

Paul Johnson

Sure. Is that cash balance of in portion that's the SBIC? there any

Howard M. Levkowitz

SBIC. million XX in There the was approximately

Paul Johnson

bit little Okay, just to wane to the driver mean have does guys dividend. know last expect it job that's guys some sustain have considering. just was the I income while thanks. I the arrangement sense earned last and off-balance or at naturally a that wondering with my Prepayment still recently years. would if think on kind you do level? you a question then you but obviously covering big the we time. the nicely start a And JV to there the has over has of begin I of help you're sort And something over I call been you mentioned to that ROE make the sheet done current great dividend,

Howard M. Levkowitz

opportunities. look to JV and continue We at opportunities other

we going not something it. other just non-qualifying because do have for doing portion are of because a bucket are We can significant asset But to we or available our use. people

on we we've with we've the kind is been of running. focus doing feel basis on with, in historically, or that an that comfortable things business done fit adjacent Our that

other it some may point be so, or we that some introduce but at that seen date we structure, the so. need to do And to haven't

Paul Johnson

That's Okay. questions. my Thanks I taking for have. all

Operator

question Christopher of Ladenburg next comes Our Thalmann. Nolan from

line Your is open.

Christopher Nolan

floors. anticipate me, floating-rate of you up. below their the be your What do to – impact According to excuse back to investments K, want are XX%

Fed would on spread? tightening bps impact for have of what the XX So a earnings

Paul L. Davis

than just This of assets different At over one, looking now and of you and floors are except a looking lag. Paul. but a a all it's at, XX/XX, maybe matter is number at our their I'm were

is us point, this So LIBOR accretive in movement any fortunately. to at

Christopher Nolan

Great.

where LIBOR, year clarification. to more for you the one mean investments on more rate thank priced about are where the changes then, LIBOR, sensitive is the Now the three-month And yield investments think we on I curve? should

Paul L. Davis

LIBOR. assets of three others some month and month, three-month. predominantly There's three-month our are one variety, Most some that are

Christopher Nolan

raise Final up are just equity? given they a looking law change little lever debt? or tax of are mean, tax I to mean, to the first affected in market. question lien get how to looking is, trying the I terms appetite the law how changes some, your more that companies does flavor for

Howard M. Levkowitz

even or have what people equity in is, their to a a to capitalization we were of from But managing similar on have be before. generally access short and There based but change. some team, answer that management cap the doing speaking in they markets solely have structures, that won't and been might be our what XXXX been big November what theoretical there we seen election how seen there to we've they've The sponsors, might impacts, math don't on right And tax apply business, family lot in in date written it the changes seen I fashion elect changes significant a sheets about that interesting balance very the an haven't mean market change. a might and changes people to some the doesn't different theory big where to we entrepreneur, that think a has yet quite starting haven't any companies. was won't happen, after and unlimited

Christopher Nolan

Right.

me. Paul. it Thanks Howard. you for thank Okay, That's

Operator

Christopher D.A. from question Davidson. next Our comes of Doug

open. is line Your

Doug Christopher

kind expansion, there. couple that have just regarding the expense advisory I this. new have a Was increases expense and the related office? the The might fee missed of levels. administrative continues to I

Paul L. Davis

It's just those the would out portion I not. across a for it's allocation various were No, waiving a point long a that we time fees. our of matter businesses. of of But expenses

be difference. that of part the So might

Doug Christopher

we under a I optimization there the the how borrowing rate lumpiness, spreads, about can point is where about talk acquisitions ask administrative reason of the and the change, we think interest BDCs, financing the that the The potential, is, and markets, potential over uncertainty the I net there is some in is leverage to where type be of where point a to we or they there that, a control, there might seem those leveraged guess consistent? be more is which of point basis it would call expenses fee dispositions

Howard M. Levkowitz

been them. Historically, has percentage It's Sure. of as Paul percentage question. a and assets, good on a pointed out, ours just we waived a of

is for them. we as bigger, gone As in potentials synergy, for to we've size. back huge but in But our loan growth there get up, also hasn't we've ramped certainly there charging case our been

of the activity So number which administrative we work surrounding of of have amount it. increased and the loans, each increases

doesn't but And so, it continue a go efficiency, alone that to grow, the in if but lot of certainly there's sometimes that, into components we the might create growth future.

Doug Christopher

you. thank right, All

Operator

next Raymond of Dodd question from comes Robert James. Our

Your line is open.

Robert Dodd

a Just spill-over the implications follow-up to follow-up, from you accrued to of Joe's the are to or allocation the just and dividend another, a pays that question allocation for shareholders? to on about undistributed income investment change income to which income, BDC this there any for fee probably Paul, company any or taxable spill-over on way one to consequences, tax changing get like

Paul L. Davis

in Sure. that parts. I'll take two

our format, to the allocation Company the of just interest all Holdco. tax carried roughly XX%-XX% the the a to were which attributes was up down structure we from in the inherited effectively allocated Operating entity, and predecessor Now, across and GP

is allocated puts structure the of the tax as BDCs of through course effective I tax as gains, a Holdco's law. shareholders allocation fee. in of not the the consequence most gets all a and BDC which line incentive receive attributes being taken The about, those only capital change this Now out all rest up change, to losses because us there pass consistent of talked really the of the just if income think the the the perspective, ordinary with is dividend. and Holdco. This I the with which are into from But kind compensation of

Robert Dodd

it. Appreciate Thank Okay. you.

Operator

the back closing turn over to no showing from further Levkowitz Howard I'd for remarks. phone I'm line. any to like questions call the

Howard M. Levkowitz

thank you us. today's for again your of Thank and professionals and appreciate you. TCP I our dialog joining experienced, We like would team dedicated This our at to Thank concludes today. Corp. questions Capital call. talented

Operator

you Thank you. today's for your gentlemen, Ladies this and participation. conference. does conclude Thank

may You all disconnect.

BlackRock TCP Capital (TCPC) 27 Feb 182017 Q4 Earnings call transcript