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Item 7. Management’s Discussion and Analysis

2021-02-25 compared with 2020-02-26 · 90 added, 91 removed, 314 unchanged (37% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our audited consolidated financial statements and related notes thereto appearing elsewhere in this annual report on Form 10-K.

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this annual report on Form 10-K.

Some of the statements in this report (including in the following discussion) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or the future performance or financial condition of BlackRock TCP Capital Corp.

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We use words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “could,” “may,” “plan” and similar words to identify forward-looking statements.

The forward looking statements contained in this annual report involve risks and uncertainties.

The forward looking statements contained in this quarterly report involve risks and uncertainties.

Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in this report.

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Such investments may include an equity component, and, to a lesser extent, we may make equity investments directly.

Certain investment operations are conducted through the Company’s wholly-owned subsidiaries, Special Value Continuation Partners LLC, a Delaware limited liability company (“SVCP”), TCPC Funding I, LLC (“TCPC Funding”) and TCPC SBIC, LP (the “SBIC”).

SVCP was organized as a limited partnership and had elected to be regulated as a BDC under the 1940 Act through July 31, 2018.

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Series H of SVOF/MM, LLC (“SVOF/MM”) serves as the administrator (the “Administrator”) of the Company.

The managing member of SVOF/MM is Tennenbaum Capital Partners, LLC (the “Advisor”), which serves as the investment manager to the Company, TCPC Funding and the SBIC.

The managing member of SVOF/MM is Tennenbaum Capital Partners, LLC (the “Advisor”), which serves as the investment manager to the Company, TCPC Funding, TCPC Funding II and the SBIC.

On August 1, 2018, the Advisor merged with and into a wholly owned subsidiary of BlackRock Capital Investment Advisors, LLC, an indirect wholly owned subsidiary of BlackRock, Inc.

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As a RIC, the Company will not be taxed on its income to the extent that it distributes such income each year and satisfies other applicable income tax requirements.

TCPC Funding and the SBIC have elected to be treated as partnerships for U.S.

TCPC Funding, TCPC Funding II and the SBIC have elected to be treated as partnerships for U.S.

federal income tax purposes.

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federal income tax purposes through August 1, 2018 and upon its conversion to a limited liability company on August 2, 2018, and thereafter is and will be treated as a disregarded entity.

Our leverage program is comprised of $270.0 million in available debt under a revolving, multi-currency credit facility issued by SVCP (the “SVCP Facility”), $300.0 million in available debt under a senior secured revolving credit facility issued by TCPC Funding (the “TCPC Funding Facility”), $140.0 million in convertible senior unsecured notes issued by the Company maturing in 2022 (the “2022 Convertible Notes”), $175.0 million in senior unsecured notes issued by the Company maturing in 2022 (the “2022 Notes”), $200.0 million in senior unsecured notes issued by the Company maturing in 2024 (the “2024 Notes”) and $150.0 million in committed leverage from the SBA (the “SBA Program” and, together with the SVCP Facility, the TCPC Funding Facility, the 2022 Convertible Notes, the 2022 Notes and the 2024 Notes, the “Leverage Program”).

Prior to being replaced by the SVCP Facility on February 26, 2018, leverage included $116.0 million in available debt under a senior secured revolving credit facility issued by SVCP (the “SVCP 2018 Facility”).

Our leverage program is comprised of $300.0 million in available debt under a revolving, multi-currency credit facility issued by SVCP (the “Operating Facility”), $200.0 million in available debt under a senior secured revolving credit facility issued by TCPC Funding II (“Funding Facility II”), $140.0 million in convertible senior unsecured notes issued by the Company maturing in 2022 (the “2022 Convertible Notes”), $175.0 million in senior unsecured notes issued by the Company maturing in 2022 (the “2022 Notes”), $250.0 million in senior unsecured notes issued by the Company maturing in 2024 (the “2024 Notes”) and $150.0 million in committed leverage from the SBA (the “SBA Program” and, together with the Operating Facility, Funding Facility II, the 2022 Convertible Notes, the 2022 Notes and the 2024 Notes, the “Leverage Program”).

Prior to being replaced by Funding Facility II on August 4, 2020, leverage included $300.0 million in available debt under a senior secured revolving credit facility issued by TCPC Funding (“Funding Facility I”).

Prior to its maturity on December 15, 2019, leverage also included convertible senior unsecured notes due December 2019 issued by the Company (the “2019 Convertible Notes”).

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Through December 31, 2017, the incentive compensation was an equity allocation to SVCP’s general partner under the LPA.

Effective as of January 1, 2018, the LPA was amended to remove the incentive compensation

distribution provisions therein, and the incentive compensation became payable as a fee to the Advisor pursuant to the then-existing investment management agreements.

Effective as of January 1, 2018, the LPA was amended to remove the incentive

compensation distribution provisions therein, and the incentive compensation became payable as a fee to the Advisor pursuant to the then-existing investment management agreements.

The amendment had no impact on the amount of the incentive compensation paid or services received by the Company.

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Level 3 — Investments that are valued using quotes and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

As of December 31, 2019 , none of our investments were categorized as Level 1, 8.3% were categorized as Level 2, 91.6% were Level 3 investments valued based on valuations by independent third party sources, and 0.1% were Level 3 investments valued based on valuations by the Advisor.

As of December 31, 2020, 0.2% of our investments were categorized as Level 1, 4.1% were categorized as Level 2, 95.6% were Level 3 investments valued based on valuations by independent third-party sources, and 0.1% were Level 3 investments valued based on valuations by the Advisor.

As of December 31, 2019, none of our investments were categorized as Level 1, 8.3% were categorized as Level 2, 91.6% were Level 3 investments valued based on valuations by independent third-party sources, and 0.1% were Level 3 investments valued based on valuations by the Advisor.

Determination of fair value involves subjective judgments and estimates.

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During the year ended December 31, 2020, we invested approximately $460.2 million, comprised of new investments in 18 new and 23 existing portfolio companies, as well as draws made on existing commitments and PIK received on prior investments.

Of these investments, 94.0% were in senior secured debt comprised of senior secured loans ($643.0 million, or 91.9% of total acquisitions) and senior secured notes ($15.0 million, or 2.1% of total acquisitions).

The remaining $42.0 million (6.0% of total acquisitions) was comprised primarily of $5.0 million(0.7% of total acquisitions) in unsecured notes and $37.0 million (5.3% of total acquisitions) in equity investments comprised primarily of $31.6 million in equity interests in portfolios of debt and lease assets and $5.4 million inequity positions received in connection with debt investments.

Of these investments, $387.9 million, or 84.3% of total acquisitions, were in senior secured debt comprised of senior secured loans ($366.8 million, or 79.7% of total acquisitions), senior secured notes ($21.1 million, or 4.6% of total acquisitions) and $4.2 million (0.9% of total acquisitions) in unsecured notes.

The remaining $68.1 million (14.8% of total acquisitions) was comprised of equity investments, including $54.4 million in equity interest in Edmentum, $7.2 million in equity interests in portfolios of debt and lease assets and $6.4 million in equity positions received in connection with debt investments.

Additionally, we received approximately $480.7 million in proceeds from sales or repayments of investments during the year ended December 31, 2020.

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The remaining $31.5 million (5.0% of total acquisitions) were comprised primarily of $20.9 million in equity interests in a portfolio of debt assets, $7.0 million in equity interests in a portfolio of lease assets, and $3.6 million in equity positions received in connection with debt investments.

The remaining $42.0 million (6.0% of total acquisitions) was comprised primarily of $5.0 million (0.7% of total acquisitions) in unsecured notes and $37.0 million (5.3% of total acquisitions) in equity investments comprised primarily of $31.6 million in equity interests in portfolios of debt and lease assets and $5.4 million in

equity positions received in connection with debt investments.

Additionally, we received approximately $596.4 million in proceeds from sales or repayments of investments during the year ended December 31, 2019.

At December 31, 2020, our investment portfolio of $1,629.6 million (at fair value) consisted of 96 portfolio companies and was invested 88.7% in debt investments, primarily in senior secured debt.

In aggregate, our investment portfolio was invested 86.6% in senior secured loans, 5.2% in senior secured notes, 1.3% in junior notes and 6.9% in equity investments.

In aggregate, our investment portfolio was invested 82.8% in senior secured loans, 5.9% in senior secured notes and 11.3% in equity investments.

Our average portfolio company investment at fair value was approximately $17.0 million.

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The industry composition of our portfolio at fair value at December 31, 2020 was as follows:

Percent of Total

Diversified Financial Services

Industry Percent of Total

Internet Software and Services 12.8 %

Diversified Financial Services 11.6 %

Software 7.3 %

Textiles, Apparel and Luxury Goods 6.1 %

Professional Services

Diversified Consumer Services 5.5 %

Automobiles 4.5 %

Professional Services 4.5 %

IT Services 3.1 %

Personal Products 2.9 %

Insurance 2.9 %

Airlines 2.6 %

Diversified Telecommunication Services 2.3 %

Hotels, Restaurants and Leisure

Consumer Finance 2.3 %

Building Products

Capital Markets 2.3 %

Health Care Technology 2.1 %

Energy Equipment and Services

Thrifts and Mortgage Finance

Hotels, Restaurants and Leisure 2.0 %

Building Products 1.9 %

Internet and Catalog Retail 1.8 %

Commercial Services and Supplies 1.7 %

Thrifts and Mortgage Finance 1.7 %

Specialty Retail 1.7 %

Tobacco Related 1.7 %

Aerospace and Defense 1.6 %

Pharmaceuticals

Capital Markets

Road and Rail

Energy Equipment and Services 1.6 %

Healthcare Providers and Services 1.5 %

Electrical Equipment 1.5 %

Road and Rail 1.0 %

Total 100.0 %

The weighted average effective yield of our debt portfolio was 9.6% at December 31, 2020 and 10.3% at December 31, 2019.

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The percentage of floating rate debt investments in our portfolio that were subject to an interest rate floor was 79.7% at December 31, 2020.

Debt investments in three portfolio companies were on non-accrual status as of December 31, 2020, representing 0.5% of the portfolio at fair value and 1.2% at cost.

At December 31, 2019, 92.1% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and 7.9% bore interest at fixed rates.

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Investment income

Investment income totaled $195.2 million, $190.5 million and $176.0 million, respectively, for the years ended December 31, 2019 , 2018 and 2017, of which $191.6 million, $189.1 million and $173.5 million were attributable to interest and fees on our debt investments, $2.4 million, $0.8 million and $0.3 million to dividend

income, $0.3 million, $0.3 million and $0.3 million to lease income and $0.9 million, $0.3 million and $1.9 million to other income, respectively.

Investment income totaled $172.1 million, $195.2 million and $190.5 million, respectively, for the years ended December 31, 2020, 2019 and 2018, of which $161.7 million, $191.6 million and $189.1 million were attributable to interest and fees on our debt investments, $2.5 million, $2.4 million and $0.8 million to dividend income, $0.1 million, $0.3 million and $0.3 million to lease income and $7.9 million, $0.9 million and $0.3 million to other income, respectively.

Included in interest and fees on our debt investments were $8.4 million, $11.9 million and $9.8 million of non-recurring income related to prepayments for the years ended December 31, 2020, 2019 and 2018, respectively.

Included in other income were $4.5 million, $0.0 million and $0.0 million in amendment fees during the years ended December 31, 2020, 2019 and 2018, respectively.

The decrease in investment income in the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily reflects a decrease in interest income due to the decline in LIBOR rates and the lower prepayment income partially offset by the higher other income received during the year ended December 31, 2020.

The increase in investment income in the year ended December 31, 2019 compared to the year ended December 31, 2018 reflects an increase in interest income due to the larger portfolio size in addition to the increase in dividend, prepayment and other income during the year ended December 31, 2019 compared to the year ended December 31, 2018.

The increase in investment income in the year ended December 31, 2018 compared to the year ended December 31, 2017 reflects an increase in interest income due to the larger portfolio size and the impact of higher LIBOR during the year ended December 31, 2018 compared to the year ended December 31, 2017, partially offset by a decrease in prepayment income.

Total operating expenses for the years ended December 31, 2020, 2019 and 2018 were $88.9 million, $100.3 million and $97.0 million, respectively, comprised of $41.2 million, $46.4 million and $40.5 million in interest expense and related fees, $23.8 million, $24.9 million and $24.2 million in base management and advisory fees, $15.3 million, $20.3 million and $23.3 million in incentive fee expense, $2.2 million, $2.3 million and $2.4 million in administrative expenses, $1.8 million, $1.8 million and $2.3 million in legal and professional fees, and $4.5 million, $4.6 million and $4.3 million in other expenses, respectively.

The decrease in expenses in the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily reflects the deferral of incentive fees related to the first quarter of 2020 and the lower interest expense due to lower LIBOR rates during the year ended December 31, 2020.

The increase in expenses in the year ended December 31, 2019 compared to the year ended December 31, 2018 primarily reflects the higher interest expense and other costs related to the increase in outstanding debt, partially offset by the lower incentive fees due to reduction in the incentive fee rate from 20.0% to 17.5% on February 9, 2019.

The increase in expenses in the year ended December 31, 2018 compared to the year ended December 31, 2017 primarily reflects the inclusion of incentive fees within operating expenses during the year ended December 31, 2018 instead of being reflected as an allocation and distribution to SVCP's general partner during the year ended December 31, 2017.

The increase in expenses also includes higher interest expense and other costs related to the increase in outstanding debt, the higher average interest rate following the issuance of the 2022 Notes and the higher LIBOR during the period, as well as the increase in management fees due to the increase in assets in the year ended December 31, 2018 compared to the year ended December 31, 2017.

Net investment income

Net investment income was $83.2 million, $94.9 million and $93.4 million, respectively, for the years ended December 31, 2020, 2019 and 2018.

The decrease in net investment income in the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily reflects the decrease in total investment income, partially offset by the decrease in expenses in the year ended December 31, 2020.

The increase in net investment income in the year ended December 31, 2019 compared to the year ended December 31, 2018 primarily reflects the increase in total investment income, partially offset by the increase in expenses in the year ended December 31, 2019.

The decrease in net investment income in the year ended December 31, 2018 compared to the year ended December 31, 2017 primarily reflects the increase in expenses (primarily due to the inclusion of incentive fees beginning January 1, 2018), partially offset by the increase in investment income in the year ended December 31, 2018.

Net realized and unrealized gain or loss

Net realized loss for the years ended December 31, 2020, 2019 and 2018 was $5.5 million, $76.6 million and $28.8 million, respectively.

Net realized loss for the year ended December 31, 2019 was comprised primarily of $56.6 million on the restructuring of our investment in Fidelis and $20.5 million on the disposition of our investment in Green Biologics.

Net realized loss for the year ended December 31, 2020 was comprised primarily of a $15.6 million loss from the restructuring of AGY and a $2.4 million loss on the disposition of our investment in V Telecom, partially offset by the $9.3 million gain from the disposition of a portion of our investment in Edmentum and a $4.9 million gain on the disposition of our investment in STG-Fairway (First Advantage), exclusive of prepayment income earned.

Our loans to AGY generated significant interest income prior to the restructuring.

Net realized loss for the year ended December 31, 2019 was comprised primarily of $56.6 million on the restructuring of

our investment in Fidelis and $20.5 million on the disposition of our investment in Green Biologics.

Both Fidelis and Green Biologics had generated significant income prior to their dispositions.

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Both Globecomm and Real Mex had generated significant income prior to their dispositions.

Net realized losses during the year ended December 31, 2017 were comprised primarily of a $10.1 million loss realization on the restructuring of our loan to Iracore International, Inc., a $7.1 million loss realization on the restructuring of our loan to Globecomm Systems, Inc., and a $3.5 million loss realization on the restructuring of our loan to Avanti Communications Group.

The realized losses for all of these investments were triggered in connection with recapitalizations of these investments.

These realized losses were partially offset by a $7.0 million gain on the sale of our equity in Blackline.

For the years ended December 31, 2019 , 2018 and 2017, the change in net unrealized appreciation/

depreciation was $12.3 million, $(19.1) million and $(2.1) million, respectively.

For the years ended December 31, 2020, 2019 and 2018, the change in net unrealized appreciation/depreciation was $(3.9) million, $12.3 million and $(19.1) million, respectively.

The change in net unrealized appreciation/depreciation for the year ended December 31, 2020 was primarily driven by net spread widening and volatility across our portfolio related to the market impact of COVID-19 including a $9.2 million unrealized loss on Fishbowl, a $6.7 million unrealized loss on our investment in Credit Suisse notes and a $5.5 million loss on GlassPoint Solar, partially offset by a gain of $8.9 million on our investment in Amteck, $8.7 million on our investment in Aventiv, $5.9 million on our investment in Domo and a gain of $5.0 million on our investment in One Sky.

The change in net unrealized appreciation/depreciation for the year ended December 31, 2019 was comprised primarily of a gain of $13.4 million on our investment in Edmentum, a gain of $6.3 million on our investment in 36th Street, and reversals of previously recognized unrealized losses of $14.9 million from Green Biologics and $3.5 million from Fidelis, partially offset by markdowns of $12.5 million on our investment in Securus and $7.7 million on our investment in AGY.

The change in net unrealized appreciation/depreciation for the year ended December 31, 2018 was comprised primarily of markdowns of $10.0 million, $9.4 million and $8.5 million on our investments in AGY, Kawa Solar and Green Biologics, respectively, as well as mark downs across the portfolio as a result of wider spreads, partially offset by the reversal of previously unrealized losses of $15.3 million from the disposition of our loan to Real Mex.

The change in net unrealized appreciation/depreciation for the year ended December 31, 2017 was comprised primarily of markdowns of $9.0 million and $7.1 million on Kawa Solar and Real Mex, respectively, partially offset by a $6.4 million gain on AGY and the reversal of previously recognized unrealized gains and losses.

Incentive compensation

The decrease in incentive compensation for the year ended December 31, 2019 compared to the year ended December 31, 2018 was due to the reduction in the incentive fee rate from 20.0% to 17.5% on February 9, 2019.

Beginning January 1, 2018, incentive compensation is paid to the Advisor as a fee and included in operating expenses in the Statement of Operations rather than as an allocation and distribution to SVCP's general partner within the Statement of Operations.

Incentive compensation included in operating expenses for the year ended December 31, 2019 and 2018 and as an allocation and distribution to SVCP's general partner for the years ended December 31, 2017 was $20.3 million, $23.4 million and $22.7 million, respectively.

Incentive compensation for the years ended December 31, 2019 , 2018 and 2017 was paid due to our performance exceeding the total return threshold.

Incentive fees for the years ended December 31, 2020, 2019 and 2018 were $15.3 million, $20.3 million and $23.3 million, respectively, and were payable due to our performance exceeding the cumulative total return threshold.

Because our incentive compensation is computed on a cumulative basis, the incentive compensation for any period may include amounts not earned in prior periods (due to our cumulative total return falling below the total return hurdle in such period), but subsequently earned when our cumulative total return again exceeds the total return hurdle (such amount, a “Catchup Amount”).

Due to portfolio volatility related to the market impact of COVID-19, $3.9 million of incentive fees related to net investment income for the first quarter of 2020 were deferred (the “First Quarter Catchup Amount”) and subsequently earned when our performance again exceeded the cumulative total return hurdle during the second quarter of 2020.

However, rather than receiving all incentive compensation earned as of June 30, 2020, the Advisor voluntarily deferred 5/6 of the First Quarter Catchup Amount to subsequent quarters such that 1/6 of the First Quarter Catchup Amount will be paid in each subsequent quarter to the extent that the Company’s cumulative performance exceeds the cumulative total return hurdle in such quarter.

Accordingly, the year ended December 31, 2020 include $1.9 million (3/6) of the First Quarter Catchup Amount.

Income tax expense, including excise tax

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Any excise tax expense is recorded at year end as such amounts are known.

For the years ended December 31, 2019 , 2018 and 2017, excise tax expenses of $0.0 million, $0.1 million and $0.1 million were recorded, respectively, based on the amount of tax-basis ordinary income carried forward at the respective year-end.

No excise tax was incurred in the years ended December 31, 2020 and 2019.

For the prior year ended December 31, 2018, excise tax expense of $0.1 million was recorded, based on the amount of tax-basis ordinary income carried forward at the prior year-end.

Net increase in net assets resulting from operations

The net increase in net assets applicable to common shareholders resulting from operations was $71.4 million, $30.6 million and $45.5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The lower net increase in net assets resulting from operations during the year ended December 31, 2019 was primarily

due to the higher net realized and unrealized loss during the year ended December 31, 2019 compared to the year ended December 31, 2018 , partially offset by the increase in net investment income.

The lower net increase in net assets applicable to common shareholders resulting from operations during the year ended December 31, 2018 was primarily due to the larger net realized and unrealized loss during the year ended December 31, 2018 compared to the year ended December 31, 2017.

The higher net increase in net assets resulting from operations during the year ended December 31, 2020 was primarily due to the lower net realized and unrealized losses, partially offset by the lower net investment income during the year ended December 31, 2020 and a $2.4 million loss on the extinguishment of Funding Facility I compared to the year ended December 31, 2019.

The lower net increase in net assets resulting from operations during the year ended December 31, 2019 was primarily due to the higher net realized and unrealized loss during the year ended December 31, 2019 compared to the year ended December 31, 2018, partially offset by the increase in net investment income.

Liquidity and capital resources

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Average Price Per Share $ 7.46 $ 13.98

Proceeds $ 6,253 $ 11,453

On February 24, 2015, the Company’s board of directors approved a stock repurchase plan (the “Company Repurchase Plan”) to acquire up to $50.0 million in the aggregate of the Company’s common stock at prices at certain thresholds below the Company’s net asset value per share, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934.

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Price Per Share * $ 6.10 $ 13.96

Total Cost $ 6,100,190 $ 125,679

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Total leverage outstanding and available under the combined Leverage Program at December 31, 2020 were as follows:

Carrying Value*

SVCP Facility

TCPC Funding Facility

Maturity Rate Carrying Value* Available Total

Operating Facility 2024 L+2.00% † $ 120,454,270 $ 179,545,730 $ 300,000,000 ‡

Funding Facility II 2025 L+2.00% § 36,000,000 164,000,000 200,000,000 **

SBA Debentures 2024−2029 2.63% †† 138,000,000 12,000,000 150,000,000

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Total leverage 856,324,371 $ 355,545,730 $ 1,211,870,101

1,231,016,451

Unamortized issuance costs (6,308,172)

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† As of December 31, 2020, $9.0 million of the outstanding amount bore interest at a rate of EURIBOR + 2.00%.

‡ Facility has a $100 million accordion which allows for expansion of the facility to up to $400.0 million subject to consent from the lender and other customary conditions.

§ Subject to certain funding requirements

** Facility has a $50 million accordion which allows for expansion of the facility to up to $250.0 million subject to consent from the lender and other customary conditions.

†† Weighted-average interest rate, excluding fees of 0.35% or 0.36%

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The exemptive relief provides us with increased flexibility under the 150% asset coverage test by permitting the SBIC to borrow up to $150.0 million more than it would otherwise be able to absent the receipt of this exemptive relief.

Net cash provided by operating activities during the year ended December 31, 2019 was $4.7 million .

Our primary source of cash from operating activities during this period consisted of net investment income (net of non-cash income and expenses) of approximately $94.6 million, partially offset by settlement of acquisitions of investments (net of dispositions) of $89.9 million.

Net cash provided by financing activities was $12.2 million during the year ended December 31, 2019 , consisting primarily of $197.6 million from net proceeds of issuance of debt and $12.5 million of net borrowings of

debt, reduced by $108.0 million in repayments of convertible debt, $84.6 million in regular dividends paid on common equity, $5.2 million payment of debt issuance costs and $0.1 million in repurchases of common shares.

Net cash provided by operating activities during the year ended December 31, 2020 was $122.3 million, consisting primarily of net investment income (net of non-cash income and expenses) of approximately $90.4 million, and the settlement of disposition of investments (net of acquisitions) of $31.9 million.

Net cash used in financing activities was $147.2 million during the year ended December 31, 2020, consisting primarily of $110.0 million net repayments of credit facility draws, $76.6 million in dividends paid to common shareholders, $6.1 million in repurchases of common shares and $4.1 million in payments of debt issuance costs, partially offset by $49.6 million in net proceeds from the issuance of unsecured debt.

At December 31, 2020, we had $20.0 million in cash and cash equivalents.

The SVCP Facility and the TCPC Funding Facility are secured by substantially all of the assets in our portfolio, including cash and cash equivalents, and are subject to compliance with customary affirmative and negative covenants, including the maintenance of a minimum shareholders’ equity, the maintenance of a ratio of not less than 150% of total assets (less total liabilities other than indebtedness) to total indebtedness, and restrictions on certain payments and issuance of debt.

Unfavorable economic conditions may result in a decrease in the value of our investments, which would affect both the asset coverage ratios and the value of the collateral securing the SVCP Facility and the TCPC Funding Facility, and may therefore impact our ability to borrow under the SVCP Facility and the TCPC Funding Facility.

The Operating Facility and Funding Facility II are secured by substantially all of the assets in our portfolio, including cash and cash equivalents, and are subject to compliance with customary affirmative and negative covenants, including the maintenance of a minimum shareholders’ equity, the maintenance of a ratio of not less than 150% of total assets (less total liabilities other than indebtedness) to total indebtedness, and restrictions on certain payments and issuance of debt.

Unfavorable economic conditions may result in a decrease in the value of our investments, which would affect both the asset coverage ratios and the value of the collateral securing the Operating Facility and Funding Facility II, and may therefore impact our ability to borrow under the Operating Facility and Funding Facility II.

In addition to regulatory restrictions that restrict our ability to raise capital, the Leverage Program contains various covenants which, if not complied with, could accelerate repayment of debt, thereby materially and adversely affecting our liquidity, financial condition and results of operations.

At December 31, 2020, we were in compliance with all financial and operational covenants required by the Leverage Program.

Unfavorable economic conditions, while potentially creating attractive opportunities for us, may decrease liquidity and raise the cost of capital generally, which could limit our ability to renew, extend or replace the Leverage Program on terms as favorable as are currently included therein.

Unfavorable economic conditions, such as those caused by COVID-19, while potentially creating attractive opportunities for us, may decrease liquidity and raise the cost of capital generally, which could limit our ability to renew, extend or replace the Leverage Program on terms as favorable as are currently included therein.

If we are unable to renew, extend or replace the Leverage Program upon the various dates of maturity, we expect to have sufficient funds to repay the outstanding balances in full from our net investment income and sales of, and repayments of principal from, our portfolio company investments, as well as from anticipated debt and equity capital raises, among other sources.

Unfavorable economic conditions may limit our ability to raise capital or the ability of the companies in which we invest to repay our loans or engage in a liquidity event, such as a sale, recapitalization or initial public offering.

The 2022 Convertible Notes, the 2022 Notes, the SVCP Facility, the TCPC Funding Facility and the 2024 Notes, mature in March 2022, August 2022, May 2023, May 2023 and August 2024, respectively.

The 2022 Convertible Notes, the 2022 Notes, the Operating Facility, Funding Facility II and the 2024 Notes, mature in March 2022, August 2022, May 2024, August 2025 and August 2024, respectively.

Any inability to renew, extend or replace the Leverage Program could adversely impact our liquidity and ability to find new investments or maintain distributions to our stockholders.

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Under our administration agreement, the Administrator provides us with administrative services, facilities and personnel.

Payments under the administration agreement are equal to an allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to us, and may include rent and our allocable portion of the cost of certain of our officers and their respective staffs.

indemnification, litigation and other extraordinary expenses and such other expenses as are approved by the directors as being reasonably related to our organization, offering, capitalization, operation or administration and any portfolio investments, as applicable.

Payments under the administration agreement are equal to an allocable portion of overhead and other expenses incurred by the

Administrator in performing its obligations to us, and may include rent and our allocable portion of the cost of certain of our officers and their respective staffs.

We are responsible for reimbursing the Advisor for due diligence and negotiation expenses, fees and expenses of custodians, administrators, transfer and distribution agents, counsel and directors, insurance, filings and registrations, proxy expenses, expenses of communications to investors, compliance expenses, interest, taxes, portfolio transaction expenses, costs of responding to regulatory inquiries and reporting to regulatory authorities, costs and expenses of preparing and maintaining our books and records, indemnification, litigation and other extraordinary expenses and such other expenses as are approved by the directors as being reasonably related to our organization, offering, capitalization, operation or administration and any portfolio investments, as applicable.

The Advisor is not responsible for any of the foregoing expenses and such services are not investment advisory services under the 1940 Act.

6 unchanged sentences

The following tables summarize dividends declared for the years ended December 31, 2020 and 2019:

Date Declared

February 28, 2019

March 15, 2019

March 29, 2019

June 14, 2019

June 28, 2019

August 8, 2019

September 16, 2019

September 30, 2019

November 6, 2019

December 17, 2019

December 31, 2019

Date Declared

Amount Per Share

February 27, 2018

March 16, 2018

March 30, 2018

June 15, 2018

June 29, 2018

August 8, 2018

September 14, 2018

September 28, 2018

November 8, 2018

December 17, 2018

December 31, 2018

Date Declared Record Date Payment Date Type Amount

Per Share Total Amount

February 26, 2020 March 17, 2020 March 31, 2020 Regular $ 0.36 $ 21,155,913

May 11, 2020 June 16, 2020 June 30, 2020 Regular 0.36 20,796,088

August 6, 2020 September 16, 2020 September 30, 2020 Regular 0.30 17,330,179

November 2, 2020 December 17, 2020 December 31, 2020 Regular 0.30 17,330,179

$ 1.32 $ 76,612,359

Date Declared Record Date Payment Date Type Amount Per Share Total Amount

February 28, 2019 March 15, 2019 March 29, 2019 Regular $ 0.36 $ 21,155,619

May 8, 2019 June 14, 2019 June 28, 2019 Regular 0.36 21,155,688

August 8, 2019 September 16, 2019 September 30, 2019 Regular 0.36 21,155,760

November 6, 2019 December 17, 2019 December 31, 2019 Regular 0.36 21,155,837

$ 1.44 $ 84,622,904

The following table summarizes the total shares issued in connection with our dividend reinvestment plan for the years ended December 31, 2020 and 2019:

1 unchanged sentence

Average Price Per Share $ 7.46 $ 13.98

Proceeds $ 6,253 $ 11,453

We have elected to be taxed as a RIC under Subchapter M of the Code.

9 unchanged sentences

In addition, although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment.

We have adopted an “opt in” dividend reinvestment plan for our common stockholders.

As a result, if we declare a dividend or other distribution payable in cash, each stockholder that has not “opted in” to our dividend reinvestment plan will receive such dividends in cash, rather than having their dividends automatically reinvested in additional shares of our common stock.

Prior to its discontinuance effective July 7, 2020, we had offered an “opt in” dividend reinvestment plan to our common stockholders, pursuant to which the dividends payable to those shareholders who so elected would be reinvested in shares of common stock.

We may not be able to achieve operating results that will allow us to make dividends and distributions at a specific level or to increase the amount of these dividends and distributions from time to time.

26 unchanged sentences

Recent Developments

From January 1, 2020 through February 25, 2020 , the Company has invested approximately $65.9 million primarily in three senior secured loans with a combined effective yield of approximately 9.5%.

On January 31, 2020, Fitch Ratings initiated an investment grade rating of BBB-, with stable outlook.

The Company continues to be investment grade rated by both Moody’s Investor Service and S&P Global Ratings.

From January 1, 2021 through February 24, 2021, the Company has invested approximately $107.3 million primarily in five senior secured loans with a combined effective yield of approximately 10.2%.

On February 9, 2021, the Company issued $175.0 million in aggregate principal amount of 2.850% senior unsecured notes due 2026 (the “2026 Notes”).

The 2026 Notes bear interest at a rate of 2.850% per year, payable semiannually, and will mature on February 9, 2026.

On February 24, 2021, the Company’s board of directors re-approved the Company Repurchase Plan, to be in effect through the earlier of two trading days after the Company’s first quarter 2021 earnings release or such time as the approved $50.0 million repurchase amount has been fully utilized, subject to certain conditions.

On February 26, 2020, the Company’s board of directors declared a first quarter regular dividend of $0.36 per share payable on March 31, 2020 to stockholders of record as of the close of business on March 17, 2020.

On February 25, 2021, the Company’s board of directors declared a first quarter dividend of $0.30 per share payable on March 31, 2021 to stockholders of record as of the close of business on March 17, 2021.

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 7. Management’s Discussion and Analysis