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Item 5. Market for Registrant’s Common Equity

2021-03-23 compared with 2020-02-27 · 128 added, 36 removed, 120 unchanged (58% of the section changed)

1 unchanged sentence

Common Stock and Holders

Our common stock is traded on the New York Stock Exchange, or NYSE, under the ticker symbol “BBDC.” As of February 27, 2020 , there were approximately 23 holders of record of our common stock.

Our common stock is traded on the New York Stock Exchange, or NYSE, under the ticker symbol “BBDC.” As of March 23, 2021, there were approximately 107 holders of record of our common stock.

This number does not include stockholders for whom shares are held in “nominee” or “street name.”

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Year Ended December 31,

Amount % of Total Amount % of Total

Ordinary income $ 0.65 100.0 % $ 0.54 100.0 %

Long-term capital gains

Tax return of capital

Total reported on IRS Form 1099-DIV $ 0.65 100.0 % $ 0.54 100.0 %

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Those subcategories are not presented herein.

We estimate the source of our distributions as required by Section 19(a) of the 1940 Act to determine whether payment of dividends are expected to be paid from any other source other than net investment income accrued for current period or certain cumulative periods, but we will not be able to determine whether any specific distribution will be treated as made out of our taxable earnings or as a return of capital until after the end of our taxable year.

Any amount treated as a return of capital will reduce a stockholder’s adjusted tax basis in his or her common stock, thereby increasing his or her potential gain or reducing his or her potential loss on the subsequent sale or other disposition of his or her common stock.

On a quarterly basis, for any payment of dividends estimated to be paid from any other source other than net investment income accrued for current period or certain cumulative periods based on the Section 19(a) requirement, we post a Section 19(a) notice through the Depository Trust Company’s Legal Notice System and our website, as well as send our registered stockholders a printed copy of such notice along with the dividend payment.

The estimates of the source of the distribution are interim estimates based on GAAP that are subject to revision, and the exact character of the distributions for tax purposes cannot be determined until the final books and records are finalized for the calendar year.

Therefore, these estimates are made solely in order to comply with the requirements of Section 19(a) of the 1940 Act and should not be relied upon for tax reporting or any other purposes and could differ significantly from the actual character of distributions for tax purposes.

Distribution Policy

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In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the calendar year, and (iii) any ordinary income and net capital gains for the preceding year that were not distributed during such year.

We will not be subject to excise taxes on amounts on which we are required to pay corporate income tax (such as retained net capital gains).

We will not be subject to excise taxes on amounts on

which we are required to pay corporate income tax (such as retained net capital gains).

In order to obtain the tax benefits applicable to RICs, we will be required to distribute to our stockholders with respect to each taxable year at least 90.0% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses.

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We may, in the future, make actual distributions to our stockholders of some or all realized net long-term capital gains in excess of realized net short-term capital losses.

We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratio and related requirements stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

See “Business — Regulation of Business Development Companies” included in Item 1 of Part I of this Annual Report on Form 10-K.

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stockholder’s account.

Our ability to make distributions will be limited by the asset coverage requirement and related provisions under the 1940 Act and in any applicable indenture and related supplements.

Our ability to make distributions will be limited by the asset coverage requirement and related provisions under the 1940 Act and by the terms of any of our borrowings or financing arrangements.

For a more detailed discussion, see “Business — Regulation of Business Development Companies” included in Item 1 of Part I of this Annual Report on Form 10-K.

Sales of Unregistered Securities

We did not sell any securities during the period covered by this report that were not registered under the Securities Act of 1933, as amended.

We did not sell any securities during the period covered by this report that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).

Issuer Purchases of Equity Securities

During the three months ended December 31, 2019 , in connection with our dividend reinvestment plan for our common stockholders, we directed the plan administrator to purchase 8,507 shares of our common stock for an aggregate of $89,422 in the open market in order to satisfy our obligations to deliver shares of common stock to our stockholders with respect to our dividend declared on October 29, 2019.

On February 25, 2019, our Board approved the Share Repurchase Plan for the purposes of repurchasing shares of our common stock in the open market.

During the three months ended December 31, 2019 , we repurchased a total of 467,739 shares of our common stock in the open market under the Share Repurchase Plan for an aggregate of $4.8 million, including broker commissions.

The following chart summarizes repurchases of our common stock for the three months ended December 31, 2019 :

Total number of shares purchased (1)

Average price paid per share

Total number of

shares purchased

as part of publicly

announced plans

Approximate dollar value of shares that

purchased under the plans or programs

October 1 through October 31, 2019

November 1 through November 30, 2019

December 1 through December 31, 2019

Includes purchases of our common stock made on the open market by or on behalf of any “affiliated purchaser,” as defined in Exchange Act Rule 10b-18(a)(3), of the Company.

Includes 74,200 shares repurchased under the Share Repurchase Plan and 8,507 shares purchased in the open market pursuant to the terms of our dividend reinvestment plan.

Based on the total maximum remaining number of shares that could be repurchased under the Share Repurchase Plan as of October 31, 2019 of 331,545 and assuming a purchase price of $10.27, which was the closing price of our common stock on the NYSE on October 31, 2019.

Based on the total maximum remaining number of shares that could be repurchased under the Share Repurchase Plan as of November 30, 2019 of 80,319 and assuming a purchase price of $10.41, which was the closing price of our common stock on the NYSE on November 29, 2019.

During the three months ended December 31, 2020, in connection with our dividend reinvestment plan for our common stockholders, we directed the Plan Administrator to purchase 31,890 shares of our common stock for an aggregate of $286,718 in the open market in order to satisfy our obligati ons to deliver shares of common stock to our stockholders with respect to our dividend declared on November 9, 2020.

Performance Graph

The following graph compares the cumulative total return on our common stock with the cumulative total return of the Nasdaq Composite Index, the NYSE Composite Index and the Wells Fargo Business Development Company Index for the five years ended December 31, 2020.

This comparison assumes $100.00 was invested in our common stock at the closing price of our common stock on December 31, 2014 and in the comparison groups and assumes the reinvestment of all cash dividends on the ex-dividend date prior to any tax effect.

This comparison assumes $100.00 was invested in our common stock (or that of Triangle Capital Corporation ("TCAP"), prior to the Transactions) at the closing price of our common stock on December 31, 2015 and in the comparison groups and assumes the reinvestment of all cash dividends on the ex-dividend date prior to any tax effect.

The stock price performance shown on the graph below is not necessarily indicative of future price performance.

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and the Wells Fargo Business Development Company Index

12/31/15 3/31/16 6/30/16 9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 12/31/17

Barings BDC, Inc.

100.00 110.73 106.79 111.01 105.86 112.83 106.79 89.46 61.35

NASDAQ Composite Index 100.00 97.57 97.34 107.09 108.87 119.89 124.89 132.46 141.13

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Wells Fargo Business Development Company Index 100.00 103.86 107.97 117.94 124.90 133.86 129.97 130.05 126.65

3/31/18 6/30/18 9/30/18 12/31/18 3/31/19 6/30/19 9/30/19 12/31/19

Barings BDC, Inc.

73.78 76.24 77.88 70.83 78.05 79.32 82.97 85.26

NASDAQ Composite Index 144.78 154.36 165.80 137.12 160.17 166.37 166.67 187.44

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Wells Fargo Business Development Company Index 124.44 131.95 139.06 123.12 141.03 146.75 152.38 160.23

3/31/20 6/30/20 9/30/20 12/31/20

Barings BDC, Inc.

63.11 68.31 70.18 82.28

NASDAQ Composite Index 161.28 211.20 234.93 271.64

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(1) From December 31, 2015 to December 31, 2020.

Senior Securities Table of Barings BDC, Inc.

(dollar amounts in thousands, except per unit data)

Information about our senior securities is shown as of the dates indicated in the below table.

The report of our independent registered public accounting firm, KPMG LLP, on the senior securities table as of December 31, 2020, is attached as an exhibit to this annual report on Form 10-K.

In addition, the report of our former independent registered public accounting firm, Ernst & Young LLP, on the senior securities table as of December 31, 2016, is attached as an exhibit to this annual report on Form 10-K.

Class and Year(1) Total Amount

Securities(2) Asset

Unit(3) Involuntary

Preference per

Unit(4) Average Market

2012 $ 69,000 $ 1,580 — $ 25.92

2013 69,000 2,259 — 25.99

2014 69,000 2,215 — 25.74

December 2022 Notes

2012 80,500 1,580 — 25.03

2013 80,500 2,259 — 24.94

2014 80,500 2,215 — 25.05

2015 80,500 1,972 — 25.23

2016 80,500 2,124 — 25.15

2017 80,500 2,120 — 25.51

March 2022 Notes

2015 86,250 1,972 — 25.46

2016 86,250 2,124 — 25.58

2017 86,250 2,120 — 25.85

SBA-guaranteed debentures payable (6)

2011 224,238 2,397 — N/A

2012 213,605 1,580 — N/A

2013 193,285 2,259 — N/A

2014 224,780 2,215 — N/A

2015 224,968 1,972 — N/A

2016 250,000 2,124 — N/A

2017 250,000 2,120 — N/A

May 2011 Credit Facility

2011 15,000 2,397 — N/A

2012 — 1,580 — N/A

2013 11,221 2,259 — N/A

2014 62,620 2,215 — N/A

2015 131,257 1,972 — N/A

2016 127,011 2,124 — N/A

2017 125,315 2,120 — N/A

August 2018 Credit Facility (7)

2018 570,000 1,988 — N/A

2019 107,200 1,851 — N/A

February 2019 Credit Facility (8)

2019 245,288 1,851 — N/A

2020 719,661 1,760 — N/A

Debt Securitization

2019 318,210 1,851 — N/A

Class and Year(1) Total Amount

Securities(2) Asset

Unit(3) Involuntary

Preference per

Unit(4) Average Market

August 2025 Notes

2020 50,000 1,760

Series B Notes

2020 62,500 1,760

Series C Notes

2020 112,500 1,760

Total Senior Securities

2011 239,238 2,397 — N/A

2012 363,105 1,580 — N/A

2013 354,006 2,259 — N/A

2014 436,900 2,215 — N/A

2015 522,975 1,972 — N/A

2016 543,761 2,124 — N/A

2017 572,820 2,120 — N/A

2018 570,000 1,988 — N/A

2019 670,698 1,851 — N/A

2020 944,661 1,760

(1) The information in the senior securities tables for 2017 - 2019 and for years prior to 2016 is unaudited.

An independent registered public accounting firm has performed agreed-upon procedures related to the accuracy of the total amount outstanding exclusive of treasury securities as of December 31, 2017, 2018 and 2019 and the asset coverage per unit as of December 31, 2017, 2018 and 2019.

(2) Total amount of each class of senior securities outstanding at the end of the period presented.

(3) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.

All prior period ratios have been conformed with this current presentation.

(4) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.

The “—” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.

(5) Average market value per unit for our unsecured notes issued in March 2012 due 2019 (the “2019 Notes”), our unsecured notes issued in October 2012 and November 2012 due 2022 (the “December 2022 Notes”) and our unsecured notes issued in February 2015 due 2022 (the “March 2022 Notes”) represent the average of the daily closing prices as reported on the NYSE for each security during 2012, 2013, 2014, 2015, 2016 and 2017, as applicable.

Average market value per unit for our SBA-guaranteed debentures payable, our terminated credit facility initially entered into in May 2011 (the “May 2011 Credit Facility”), Barings BDC Senior Funding I, LLC's terminated credit facility initially entered into in August 2018 with Bank of America, N.A.

(the "August 2018 Credit Facility"), the February 2019 Credit Facility, our $449.3 million term debt securitization in May 2019 (the “Debt Securitization”), the August 2025 Notes and the November Notes are not applicable because these senior securities are not registered for public trading.

(6) We have obtained exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures payable from the 200% asset coverage test under the Investment Company Act.

(7) The August 2018 Credit Facility was terminated at our election in June 2020.

(8) The remaining notes issued in connection with the Debt Securitization were repaid in full in October 2020.

Selected Financial Data.

The selected financial data at and for the fiscal years ended December 31, 2016, 2017, 2018 and 2019 have been derived from our financial statements that have been audited by Ernst & Young LLP, an independent registered public accounting firm.

The selected financial data at and for the fiscal year ended December 31, 2020 has been derived from our financial statements that have been audited by KPMG LLP, an independent registered public accounting firm.

You should read this selected financial and other data in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto.

Year Ended December 31,

2016 2017 2018 2019 2020

(Dollars and share amounts in thousands, except per share data)

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Interest income from cash

348 715 1,985 10 —

Total investment income 113,680 123,005 80,223 75,648 71,031

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Net operating expenses 54,803 50,767 80,284 45,096 39,973

Net investment income (loss)

Net investment income (loss) before taxes 58,877 72,238 (61) 30,552 31,058

Income taxes, including excise tax expense — — — — 70

Net investment income (loss) after taxes 58,877 72,238 (61) 30,552 30,988

Net realized gains (losses):

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Net realized gains (losses)

1,985 (51,600) (158,392) (3,810) (38,289)

Net unrealized appreciation (depreciation):

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Net unrealized appreciation (depreciation)

Net realized and unrealized gains (losses) on investments and foreign currency transactions

(26,170) (48,417) 53,746 32,088 18,550

Net realized gains (losses) and and unrealized appreciation (depreciation) on investments and foreign currency transactions (24,185) (100,017) (104,646) 28,278 (19,739)

Loss on extinguishment of debt — — (10,507) (297) (3,089)

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Net investment income (loss) per share — basic and diluted

$ 1.62 $ 1.55 $ — $ 0.61 $ 0.64

Net increase (decrease) in net assets resulting from operations per share — basic and diluted

$ 0.94 $ (0.62) $ (2.29) $ 1.16 $ 0.17

Net asset value per common share $ 15.13 $ 13.43 $ 10.98 $ 11.66 $ 10.99

Quarterly dividends / distributions per share

Supplemental dividends / distributions per share

Total dividends/distributions declared per share $ 1.89 $1.65 $0.43 $0.54 $0.65

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Year Ended December 31,

2016 2017 2018 2019 2020

(Dollars in thousands)

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Investments at fair value $ 1,037,907 $ 1,016,284 $ 1,121,856 $ 1,173,644 $ 1,495,796

Cash 107,088 191,850 12,427 13,568 62,651

Foreign currencies — — — 8,424 29,836

Interest and fees receivable 10,190 7,807 6,009 5,266 21,618

Prepaid expenses and other current assets

Prepaid expenses and other assets 1,660 1,855 2,732 1,112 2,015

Credit support agreement — — — — 13,600

Deferred income taxes — — 1,391 — —

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Property and equipment, net 106 81 — — —

Total assets $ 1,159,651 $ 1,223,063 $ 1,167,577 $ 1,252,635 $ 1,677,039

Accounts payable and accrued liabilities $ 6,797 $ 9,863 $ 1,787 $ 1,501 $ 6,045

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Deferred income taxes 2,054 1,332 — — —

Administrative fees payable — — 507 400 675

Base management fees payable — — 2,732 3,267 3,413

Derivatives liabilities — — — 24 1,337

Payable from unsettled transactions — — 28,533 4,924 1,549

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Debt securitization — — — 316,664 —

Notes 162,755 163,408 — — 224,336

SBA-guaranteed debentures payable 245,390 246,321 — — —

Total liabilities 548,495 581,788 604,610 681,760 959,235

Net assets 611,156 641,275 562,967 570,875 717,804

Total liabilities and net assets $ 1,159,651 $ 1,223,063 $ 1,167,577 $ 1,252,635 $ 1,677,039

Weighted average yield on total investments (including non-accrual debt investments) 9.7 % 8.5 % 6.0 % 5.8 % 6.5 %

Weighted average yield on total investments

(excluding non-accrual debt investments) 10.2 % 9.6 % 6.0 % 5.8 % 6.4 %

Number of portfolio companies 88 89 139 147 146

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Ratio of total expenses, net of base management fee waived, including loss on extinguishment of debt and (provision for) benefit from taxes, to average net assets 9.9 % 7.7 % 14.3 % 7.9 % 8.3 %

Excludes non-accrual debt investments.

2018 and 2019 weighted average yield of 6.2% represent the aggregate of the weighted average yield of the middle-market private debt portfolio and the syndicated senior loan portfolio.

As of December 31, 2018 , the weighted average yield on our syndicated senior secured loan portfolio and our middle-market private debt portfolio was approximately 5.8% and 7.6%, respectively.

As of December 31, 2019 the weighted average yield on our syndicated senior secured loan portfolio and our middle-market private debt portfolio was approximately 5.4% and 7.0%, respectively.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity