Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Price Range of Common Stock
Our common stock began trading on April 5, 2012 and is currently traded on The Nasdaq Global Select Market under the symbol “TCPC.” The following table lists the high and low closing sale price for our common stock, the closing sale price as a percentage of net asset value, or NAV, and quarterly distributions per share in each fiscal quarter for the years ended December 31, 2020 and 2019. Our common stock historically has traded at prices both above and below its net asset value. There can be no assurance, however, that such premium or discount ranges, as applicable, to net asset value will be maintained.
Premium/ (Discount) of High Sales Price to NAV (3)
Premium/ (Discount) of Low Sales Price to NAV (3)
Declared Dividends
Stock Price
NAV (1)
High (2)
Low (2)
Fiscal year ended December 31, 2020
First Quarter $ 11.76 $ 14.75 $ 4.40 25.4 % (62.6) % $ 0.36
Second Quarter 12.21 10.82 5.22 (11.4) % (57.2) % 0.36
Third Quarter 12.71 10.28 8.75 (19.1) % (31.2) % 0.30
Fourth Quarter 13.24 12.37 9.22 (6.6) % (30.4) % 0.30
Fiscal year ended December 31, 2019
First Quarter $ 14.18 $ 14.87 $ 13.21 4.9 % (6.8) % $ 0.36
Second Quarter 13.64 14.77 14.05 8.3 % 3.0 % 0.36
Third Quarter 13.59 14.32 13.16 5.4 % (3.2) % 0.36
Fourth Quarter 13.21 14.48 13.15 9.6 % (0.5) % 0.36
(1) NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.
(2) The High/Low Stock Price is calculated as of the closing price on a given day in the applicable quarter.
(3) Calculated as the respective High/Low Stock Price minus the quarter end NAV, divided by the quarter end NAV.
As of February 24, 2021, we had approximate ly 30,000 beneficial owners whose shares are held in the names of the brokers, dealers and clearing agencies, and we had 21 stockholders of record. On February 24, 2021, the last reported sales price of our common stock wa s $12.62 per share.
The table below sets forth each class of our outstanding securities as of February 24, 2021.
Title of Class Amount Authorized Amount Held by Registrant or for its Account Amount Outstanding
Common Stock 200,000,000 — 57,767,264
Distributions
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Our quarterly dividends and distributions to common stockholders are recorded on the ex-dividend date and are determined by our board of directors. Distributions are declared considering our estimate of annual taxable income available for distribution to stockholders and the amount of taxable income carried over from the prior year for distribution in the current year. We do not have a policy to pay distributions at a specific level and expect to continue to distribute substantially all of our taxable income. Changes in investment results or focus, expense levels and other factors may have an effect on the amount of distributions we pay in the future. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.
The following table summarizes the Company’s dividends declared and paid for the year ended December 31, 2020:
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
The following table summarizes the Company’s dividends declared and paid for the year ended December 31, 2019:
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
Tax characteristics of all dividends are reported to stockholders on Form 1099-DIV or Form 1042-S after the end of the calendar year.
We have elected to be taxed as a RIC under Subchapter M of the Code. In order to maintain favorable RIC tax treatment, we must distribute annually to our stockholders at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. 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:
• 98% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;
• 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for the one-year period generally ending on October 31 of the calendar year; and
• certain undistributed amounts from previous years on which we paid no U.S. federal income tax.
We may, at our discretion, carry forward taxable income in excess of calendar year distributions and pay a 4% excise tax on this income. If we choose to do so, all other things being equal, this would increase expenses and reduce the amounts available to be distributed to our stockholders. We will accrue excise tax on estimated taxable income as required. In addition, although we currently intend to distribute realized net capital gains (i.e., net long-
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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 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. Also, we may be limited in our ability to make dividends and distributions due to the asset coverage test applicable to us as a BDC under the 1940 Act and due to provisions in our existing and future credit facilities. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of favorable RIC tax treatment. In addition, in accordance with U.S. generally accepted accounting principles and tax regulations, we include in income certain amounts that we have not yet received in cash, such as PIK interest, which represents contractual interest added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC and may be subject to an excise tax.
In order to satisfy the annual distribution requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion can be as low as 10% for dividends paid with respect to any taxable year) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG BLACKROCK TCP CAPITAL CORP., S&P 500 TOTAL RETURN INDEX AND WELLS FARGO BUSINESS DEVELOPMENT COMPANY INDEX
Total Return Performance
NOTES: Assumes $100 invested April 4, 2012 in BlackRock TCP Capital Corp., the S&P 500 Total Return Index, the S&P LSTA Leveraged Loan Index and the Wells Fargo Business Development Company Index. Assumes all dividends are reinvested on the respective dividend payment dates without commissions.
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Fees and Expenses
The following table is intended to assist you in understanding the costs and expenses that an investor in a potential offering of our common stock would bear directly or indirectly. The following table and example should not be considered a representation of our future expenses. Actual expenses may be greater or less than shown. The following table and example represent our best estimate of the fees and expenses that we expect to incur during the next twelve months.
Stockholder Transaction Expenses
Sales Load (as a percentage of offering price) % (1)
Offering Expenses (as a percentage of offering price) % (2)
Dividend Reinvestment Plan Fees — (3)
Total Stockholder Transaction Expenses (as a percentage of offering price)
Annual Expenses (as a Percentage of Net Assets Attributable to Common Stock)(4)
Base Management Fees 3.06 % (5)
Incentive Compensation Payable Under the Investment Management Agreement 1.96 % (6)
Interest Payments on Borrowed Funds 4.4 % (7)
Other Expenses 1.02 % (8)
Total Annual Expenses 10.44 %
(1) In the event that securities are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load.
(2) The related prospectus supplement will disclose the estimated amount of offering expenses, the offering price and the estimated offering expenses borne by us as a percentage of the offering price.
(3) The expenses of the dividend reinvestment plan are included in “other expenses.”
(4) The “net assets attributable to common stock” used to calculate the percentages in this table is our average net assets of $735.6 million for the twelve month period ended December 31, 2020.
(5) The base management fee is calculated at an annual rate of 1.5% of our total assets (excluding cash and cash equivalents) payable quarterly in arrears; provided, however, that, effective as of February 9, 2019, the base management fee is calculated at an annual rate of 1.0% of our total assets (excluding cash and cash equivalents) that exceed an amount equal to 200% of the net asset value of the Company. The percentage shown in the table, which assumes all capital and leverage is invested at the maximum level, is calculated by determining the ratio that the aggregate base management fee bears to our net assets attributable to common stock and not total assets. We make this conversion because all of our interest is indirectly borne by our common stockholders. If we borrow money or issue preferred stock and invest the proceeds other than in cash and cash equivalents, our base management fees will increase. The base management fee for any partial quarter is appropriately prorated.
(6) Under the current investment management agreement, dated February 9, 2019, the incentive compensation equals the sum of (1) 20% of all ordinary income since January 1, 2013 through February 8, 2019 and 17.5% thereafter and (2) 20% of all net realized capital gains (net of any net unrealized capital depreciation) since January 1, 2013 through February 8, 2019 and 17.5% thereafter, less ordinary income incentive compensation and capital gains incentive compensation previously paid. However, incentive compensation will only be paid to the extent the cumulative total return of the Company after incentive compensation and including such payment would equal or exceed a 7% annual return on daily weighted average contributed common equity. The incentive compensation is payable quarterly in arrears (or upon termination of the Advisor as the investment manager, as of the termination date).
For assets held on January 1, 2013, capital gain, loss and depreciation are measured on an asset by asset basis against the value thereof as of December 31, 2012. The capital gains component is paid or distributed in full prior to payment or distribution of the ordinary income component.
(7) “Interest Payments on Borrowed Funds” represents interest and fees estimated to be accrued on the Operating Facility and Funding Facility II and amortization of debt issuance costs, and assumes the Operating Facility and Funding Facility II are fully drawn (subject to asset coverage limitations under the 1940 Act) and that the interest
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rate on the debt issued (i) under the Operating Facility is the rate in effect as of December 31, 2020, which was 2.14% and (ii) under the Funding Facility II is the rate in effect as of December 31, 2020, which was 2.15%. “Interest Payments on Borrowed Funds” additionally represents interest and fees estimated to be accrued on our $140.0 million in aggregate principal amount of our 4.625% convertible senior unsecured notes due 2022, which bear interest at an annual rate of 4.625%, payable semi-annually, and are convertible into shares of our common stock under certain circumstances, our $175.0 million in aggregate principal amount of notes due 2022, which bear interest at an annual rate of 4.125%, payable semi-annually, our $250.0 million in aggregate principal amount of notes due 2024, which bear interest at an annual rate of 3.90%, payable semi-annually, and our $150.0 million of committed leverage from the SBA, which SBA debentures, once drawn, bear an interim interest rate of LIBOR plus 30 basis points, are non-recourse and may be prepaid at any time without penalty, and assumes that the committed leverage from the SBA is fully drawn. When we borrow money or issue preferred stock, all of our interest and preferred stock dividend payments are indirectly borne by our common stockholders.
(8) “Other Expenses” includes our estimated overhead expenses, including expenses of our Advisor reimbursable under the investment management agreement and of the Administrator reimbursable under the administration agreement except for certain administration overhead costs which are not currently contemplated to be charged to us. Such expense estimate, other than the Administrator expenses, is based on actual other expenses for the twelve month period ended December 31, 2020.
Example
The following example demonstrates the projected dollar amount of total cumulative expenses (including stockholder transaction expenses and annual expenses) that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that our annual operating expenses remain at the levels set forth in the table above.
1 year 3 years 5 years 10 years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return resulting entirely from net investment income(1) $ 107 $ 261 $ 405 $ 722
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return resulting entirely from net realized capital gains(2) $ 107 $ 261 $ 405 $ 722
(1) All incentive compensation (on both net investment income and net realized gains) is subject to a total return hurdle of 7%. Consequently, no incentive compensation would be incurred in this scenario.
(2) All incentive compensation (on both net investment income and net realized gains) is subject to a total return hurdle of 7%. Consequently, no incentive compensation would be incurred in this scenario. Assumes no unrealized capital depreciation.
While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. There is no incentive compensation either on income or on capital gains under our investment management agreement assuming a 5% annual return and therefore it is not included in the example. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive compensation of a material amount, our distributions to our common stockholders and our expenses would likely be higher. In addition, the example assumes reinvestment of all dividends and distributions at net asset value.
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Item 6. Selected Financial Data
The selected consolidated financial and other data below reflects the consolidated historical operations of the Company.
The selected consolidated financial data below for the years ended December 31, 2020, 2019, 2018, 2017 and 2016 have been derived from the consolidated financial statements that were audited by our independent registered public accounting firm. The following selected financial data should be read in conjunction with our financial statements and related notes thereto.
Fiscal Year Ended December 31,
2020 2019 2018 2017 2016
Performance Data:
Interest income $ 161,658,217 $ 191,584,009 $ 189,147,814 $ $ 173,527,345 $ 145,018,414
Dividend income 2,473,865 2,392,274 750,714 254,025 —
Lease income 38,136 297,827 297,827 294,366 1,571,280
Other income 7,933,508 891,805 302,829 1,893,764 1,591,071
Total investment income 172,103,726 195,165,915 190,499,184 175,969,500 148,180,765
Interest and other debt expenses 41,237,035 46,398,795 40,468,761 33,091,143 25,192,990
Management and advisory fees 23,806,418 24,860,910 24,179,376 21,560,868 18,881,786
Incentive fee 15,314,201 20,307,759 23,346,164 N/A * N/A *
Other expenses 8,524,090 8,740,358 9,027,528 7,879,489 8,283,156
Total expenses 88,881,744 100,307,822 97,021,829 62,531,500 52,357,932
Net investment income before taxes 83,221,982 94,858,093 93,477,355 113,438,000 95,822,833
Excise tax expense — — 92,700 36,380 569,511
Net investment income 83,221,982 94,858,093 93,384,655 113,401,620 95,253,322
Net realized and unrealized gains (losses) (9,410,581) (64,277,304) (47,908,773) (22,790,283) 114,502
Realized loss on extinguishment of debt (2,436,913) — — — —
Incentive allocation N/A * N/A * N/A * (22,680,323) (19,050,665)
Net increase in net assets applicable to common shareholders resulting from operations $ 71,374,488 $ 30,580,789 $ 45,475,882 $ 67,931,014 $ 76,317,159
Per Share Data (at the end of the period):
Net increase in net assets from operations $ 1.23 $ 0.52 $ 0.77 $ 1.19 $ 1.50
Distributions declared per share (1.32) (1.44) (1.44) (1.44) (1.44)
Average weighted shares outstanding for the period 57,991,233 58,766,362 58,815,216 57,000,658 50,948,035
Assets and Liabilities Data:
Investments $ 1,629,564,482 $ 1,649,506,895 $ 1,597,285,790 $ 1,514,532,703 $ 1,314,969,870
Other assets 42,422,673 72,562,301 62,249,899 114,889,665 72,628,591
Total assets 1,671,987,155 1,722,069,196 1,659,535,689 1,629,422,368 1,387,598,461
Debt, net of unamortized issuance costs 850,016,199 907,802,387 805,202,192 725,200,281 571,658,862
Other liabilities 56,984,378 37,948,423 23,858,770 33,493,961 25,003,608
Total liabilities 907,000,577 945,750,810 829,060,962 758,694,242 596,662,470
Net assets $ 764,986,578 $ 776,318,386 $ 830,474,727 $ 870,728,126 $ 790,935,991
Investment Activity Data:
No. of portfolio companies at period end 96 105 95 95 90
Acquisitions $ 460,153,100 $ 700,024,114 $ 634,002,472 $ 865,427,957 $ 587,219,129
Sales, repayments, and other disposals $ 480,719,625 $ 596,374,086 $ 512,795,715 $ 655,674,365 $ 473,457,512
Weighted-average effective yield of debt portfolio at end of period 9.6 % 10.3 % 11.4 % 11.0 % 10.9 %
* Prior to January 1, 2018, Incentive fees were reflected as Incentive allocation and distribution to the General Partner.
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