TCPC: ﹩523 Million Portfolio Sale Cuts Leverage and NAV
BlackRock TCP Capital Corp. said on August 6 that it agreed to sell 95% equity interests in a vehicle holding approximately ﹩523 million of investments. The transaction is designed to reset the balance sheet, but management expects it to reduce net asset value by about 10.4%, or ﹩0.68 per share, based on June 30 figures.
The company estimates pro forma net leverage of approximately 0.4 times after the sale and less than 0.3 times after a separately announced debt paydown. That compares with net leverage of 1.38 times at June 30.
Why it matters
The sale exchanges a significant portion of current book value for lower leverage and more balance-sheet flexibility. The expected NAV reduction is substantial, although the resulting capital structure could lower refinancing pressure and give TCPC room to rebuild the portfolio more selectively.
Second-quarter net investment income was ﹩0.22 per share, above the ﹩0.17 dividend declared for the third quarter. NAV was ﹩6.58 per share, down from ﹩6.72 at March 31. Nonaccruals improved to 1.6% of the portfolio at fair value from 2.8%.
What to watch
Investors should watch the transaction’s completion, the final impact on NAV, and how quickly proceeds are redeployed. The central question is whether TCPC can improve recurring income and credit quality without rebuilding leverage too rapidly.
Sources
This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.