Last10K.com

Tcg Bdc, Inc. (CGBD) SEC Filing 8-K Material Event for the period ending Tuesday, May 5, 2020

Tcg Bdc, Inc.

CIK: 1544206 Ticker: CGBD


Exhibit 99.1

tcgbdc541cmyka11.jpg


For Immediate Release
May 5, 2020

TCG BDC, Inc. Announces First Quarter 2020 Financial Results and Declares Second Quarter 2020 Dividend of $0.37 Per Share

New York - TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) (NASDAQ: CGBD) today announced its financial results for its first quarter ended March 31, 2020.

Linda Pace, TCG BDC’s Chief Executive Officer said, "The world continues to deal with an unprecedented health and economic crisis, and our thoughts are with all front line workers. TCG BDC has performed very well during the early stages of this crisis. In the month of April we have acted proactively and decisively, pursuing select asset sales and raising preferred equity on attractive terms. These actions help to both bring our net financial leverage back in-line with our targeted range and also reinforce the flexibility of our balance sheet as we manage through a highly uncertain environment.  As a result, we remain in a strong position to both support our portfolio and to invest in new opportunities.”

Selected Financial Highlights
(dollar amounts in thousands, except per share data)
March 31, 2020
 
December 31, 2019
Total investments, at fair value
$
2,024,277

 
$
2,123,964

Total assets
2,126,826

 
2,187,533

Total debt
1,262,960

 
1,177,832

Total net assets
$
798,534

 
$
956,471

Net assets per share
$
14.18

 
$
16.56

 
 
For the three month periods ended
 
 
March 31, 2020
 
December 31, 2019
Total investment income
 
$
50,545

 
$
53,465

Net investment income (loss)
 
23,972

 
25,377

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities
 
(145,072
)
 
1,459

Net increase (decrease) in net assets resulting from operations
 
$
(121,100
)
 
$
26,836

 
 
 
 
 
Basic and diluted per weighted-average common share:
 
 
 
 
Net investment income (loss)
 
$
0.42

 
$
0.43

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities
 
(2.57
)
 
0.02

Net increase (decrease) in net assets resulting from operations
 
$
(2.15
)
 
$
0.46

Weighted-average shares of common stock outstanding—Basic and Diluted
 
57,112,193

 
58,784,971

Regular dividends declared per common share
 
$
0.37

 
$
0.37

Special dividends declared per common share
 
$

 
$
0.18



Page | 1



First Quarter 2020 Highlights
(dollar amounts in thousands, except per share data)
Net investment income for the three month period ended March 31, 2020 was $23,972, or $0.42 per share, as compared to $25,377, or $0.43 per share, for the three month period ended December 31, 2019;
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments and non-investment assets and liabilities for the three month period ended March 31, 2020 was $(145,072), or $(2.57) per share, as compared to $1,459, or $0.02 per share, for the three month period ended December 31, 2019;
Net increase (decrease) in net assets resulting from operations for the three month period ended March 31, 2020 was $(121,100), or $(2.12) per share, as compared to $26,836, or $0.46 per share, for the three month period ended December 31, 2019;
During the three month period ended March 31, 2020, the Company repurchased and extinguished 1,455,195 shares of the Company's common stock pursuant to the Company's previously announced $100 million stock repurchase program at an average cost of $11.00 per share, or $16,003 in the aggregate, resulting in accretion to net assets per share of $0.14; and
On May 4, 2020, the Board of Directors declared a quarterly dividend of $0.37, which is payable on July 17, 2020 to stockholders of record on June 30, 2020.

Portfolio and Investment Activity
(dollar amounts in thousands, except per share data, unless otherwise noted)

As of March 31, 2020, the fair value of our investments was approximately $2,024,277, comprised of 138 investments in 110 portfolio companies/investment fund across 28 industries with 63 sponsors. This compares to the Company’s portfolio as of December 31, 2019, as of which date the fair value of our investments was approximately $2,123,964, comprised of 136 investments in 112 portfolio companies/investment fund across 28 industries with 63 sponsors.
As of March 31, 2020 and December 31, 2019, investments consisted of the following:
 
March 31, 2020
 
December 31, 2019
 Type—% of Fair Value
Fair Value
 
% of Fair Value
 
Fair Value
 
% of Fair Value
First Lien Debt (excluding First Lien/Last Out)
$
1,478,357

 
73.02
%
 
$
1,585,042

 
74.63
%
First Lien/Last Out Unitranche
56,408

 
2.79

 
78,096

 
3.68

Second Lien Debt
275,055

 
13.59

 
234,532

 
11.04

Equity Investments
29,323

 
1.45

 
21,698

 
1.02

Investment Fund
185,134

 
9.15

 
204,596

 
9.63

Total
$
2,024,277

 
100.00
%
 
$
2,123,964

 
100.00
%

The following table shows our investment activity for the three month period ended March 31, 2020:
 
Funded
 
Sold/Repaid
Principal amount of investments:
Amount
 
% of Total
 
Amount
 
% of Total
First Lien Debt (excluding First Lien/Last Out)
$
75,510

 
23.01
%
 
$
(97,185
)
 
33.72
%
First Lien/Last Out Unitranche

 

 
(19,273
)
 
6.69

Second Lien Debt
86,109

 
26.24

 
(15,232
)
 
5.29

Equity Investments
10,500

 
3.20

 

 

Investment Fund
156,000

 
47.55

 
(156,500
)
 
54.30

Total
$
328,119

 
100.00
%
 
$
(288,190
)
 
100.00
%

Overall, total investments at fair value decreased by 4.7%, or $99,687, during the three month period ended March 31, 2020 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation).

As of March 31, 2020, the weighted average yields for our first and second lien debt investments on an amortized cost basis were 7.35% and 9.92%, respectively, with a total weighted average yield of 7.74%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2020. As of March 31,

Page | 2



2020, on a fair value basis, approximately 0.8% of our debt investments bear interest at a fixed rate and approximately 99.2% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.

Total investments at fair value held by Middle Market Credit Fund, LLC (“Credit Fund”), which is not consolidated with the Company, decreased by 3.8%, or $47,656, during the three month period ended March 31, 2020 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation). As of March 31, 2020, Credit Fund had total investments at fair value of $1,199,183, which comprised 98.2% of first lien senior secured loans and 1.8% of second lien senior secured loans at fair value. As of March 31, 2020, approximately 1.8% of Credit Fund's debt investments bear interest at a fixed rate and approximately 98.2% of investments in the portfolio were floating rate debt investments, which primarily are subject to interest rate floors.
As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”:
Internal Risk Ratings Definitions
Rating
  
Definition
1
  
Performing—Low Risk: Borrower is operating more than 10% ahead of the base case.
 
 
2
  
Performing—Stable Risk: Borrower is operating within 10% of the base case (above or below). This is the initial rating assigned to all new borrowers.
 
 
3
  
Performing—Management Notice: Borrower is operating more than 10% below the base case. A financial covenant default may have occurred, but there is a low risk of payment default.
 
 
4
  
Watch List: Borrower is operating more than 20% below the base case and there is a high risk of covenant default, or it may have already occurred. Payments are current although subject to greater uncertainty, and there is moderate to high risk of payment default.
 
 
5
  
Watch List—Possible Loss: Borrower is operating more than 30% below the base case. At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have occurred. Loss of principal is possible.
 
 
6
  
Watch List—Probable Loss: Borrower is operating more than 40% below the base case, and at the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have already occurred. Additionally, the prospects for improvement in the borrower’s situation are sufficiently negative that impairment of some or all principal is probable.
Our Investment Adviser’s risk rating model is based on evaluating portfolio company performance in comparison to the base case when considering certain credit metrics including, but not limited to, adjusted EBITDA and net senior leverage as well as specific events including, but not limited to, default and impairment.
Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. In connection with our quarterly valuation process, our Investment Adviser reviews our investment ratings on a regular basis. The following table summarizes the Internal Risk Ratings of our debt portfolio as of March 31, 2020 and December 31, 2019:
 
March 31, 2020
 
December 31, 2019
 
Fair Value
 
% of Fair Value
 
Fair Value
 
% of Fair Value
(dollar amounts in millions)
 
 
 
 
 
 
 
Internal Risk Rating 1
$
38.6

 
2.13
%
 
$
39.2

 
2.07
%
Internal Risk Rating 2
1,392.5

 
76.94

 
1,501.4

 
79.12

Internal Risk Rating 3
205.8

 
11.37

 
132.9

 
7.00

Internal Risk Rating 4
96.6

 
5.34

 
159.0

 
8.38

Internal Risk Rating 5
32.6

 
1.80

 
65.2

 
3.43

Internal Risk Rating 6
43.8

 
2.42

 

 

Total
$
1,809.8

 
100.00
%
 
$
1,897.7

 
100.00
%


Page | 3



As of March 31, 2020 and December 31, 2019, the weighted average Internal Risk Rating of our debt investment portfolio was 2.3 and 2.3, respectively.

Consolidated Results of Operations
(dollar amounts in thousands, except per share data)

Total investment income for the three month periods ended March 31, 2020 and December 31, 2019 was $50,545 and $53,465, respectively. This $2,920 net decrease during the three month period ended March 31, 2020 was due to a decrease in interest income primarily due to lower LIBOR, a decrease in income recognized from the acceleration of OID due to lower repayments, and lower total income from Credit Fund.

Total expenses for the three month periods ended March 31, 2020 and December 31, 2019 were $26,573 and $28,088, respectively. This $1,515 net decrease during the three month period ended March 31, 2020 was primarily attributable to a decrease in credit facility fees, base management fees and incentive fees, partially offset by an increase in interest expense.

During the three month period ended March 31, 2020, the Company recorded a net realized loss and change in unrealized depreciation on investments of $147,260. This was primarily driven by higher market spreads related to the COVID-19 pandemic, as well as other changes in other inputs utilized under our valuation methodology, including, but not limited to, enterprise value multiples, leverage multiples and borrower ratings, and the impact of exits.

Liquidity and Capital Resources
(dollar amounts in thousands, except per share data)

As of March 31, 2020, the Company had cash and cash equivalents of $65,525, secured notes payable (before debt issuance costs) of $449,200, secured borrowings outstanding of $701,609, and senior unsecured notes of $115,000. As of March 31, 2020, the Company had $261,391 of remaining unfunded commitments and $127,329 available for additional borrowings under its revolving credit facilities, subject to leverage and borrowing base restrictions.

On May 5, 2020, the Company announced it had issued $50 million in Series A Convertible Preferred Stock, purchased by an affiliate of The Carlyle Group, Inc. The primary use of proceeds from the issuance will be to pay down outstanding debt. The Series A Convertible Preferred Stock pays dividends, at the Company’s option, at a rate of either 7% (to the extent paid in cash) or 9% (to the extent paid in kind). The Series A Convertible Preferred Stock is convertible beginning six months after the closing date into shares of the Company’s common stock at an implied conversion price of $9.50, or 57% above the current 30-day VWAP.  The Series A Convertible Preferred Stock may be redeemed at the option of the Company after 3 years, or in the event of certain other events. Holders of the Series A Convertible Preferred Stock may request redemption after seven years, and such redemption may be satisfied - at the Company’s option - in either shares of common stock or other consideration. 

Dividend

On May 4, 2020, the Board of Directors declared a quarterly dividend of $0.37, which is payable on July 17, 2020 to stockholders of record on June 30, 2020.

Conference Call

The Company will host a conference call at 11:00 a.m. EDT on Wednesday, May 6, 2020 to discuss these quarterly financial results. The call and webcast will be available on the TCG BDC website at tcgbdc.com. The call may be accessed by dialing +1 (866) 394-4623 (U.S.) or +1 (409) 350-3158 (international) and referencing “TCG BDC Financial Results Call.” The conference call will be webcast simultaneously via a link on TCG BDC’s website and an archived replay of the webcast also will be available on the website soon after the live call for 21 days.

Page | 4



TCG BDC, INC.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollar amounts in thousands, except per share data)
 
March 31, 2020
 
December 31, 2019
 
(unaudited)
 
(unaudited)
ASSETS
 
 
 
Investments, at fair value
 
 
 
Investments—non-controlled/non-affiliated, at fair value (amortized cost of $2,007,160 and $1,960,755, respectively)
$
1,826,422

 
$
1,897,057

Investments—controlled/affiliated, at fair value (amortized cost of $240,167 and $240,696, respectively)
197,855

 
226,907

Total investments, at fair value (amortized cost of $2,247,327 and $2,201,451, respectively)
2,024,277

 
2,123,964

Cash and cash equivalents
65,525

 
36,751

Receivable for investment sold
15,655

 
6,162

Deferred financing costs
4,026

 
4,032

Interest receivable from non-controlled/non-affiliated investments
10,406

 
9,462

Interest and dividend receivable from controlled/affiliated investments
6,350

 
6,845

Prepaid expenses and other assets
587

 
317

Total assets
$
2,126,826

 
$
2,187,533

LIABILITIES
 
 
 
Secured borrowings
$
701,609

 
$
616,543

Notes payable, net of unamortized debt issuance costs of $2,849 and $2,911, respectively
446,351

 
446,289

Senior Notes
115,000

 
115,000

Payable for investments purchased
24,345

 

Interest and credit facility fees payable
6,100

 
6,764

Dividend payable
20,824

 
31,760

Base management and incentive fees payable
12,333

 
13,236

Administrative service fees payable
98

 
77

Other accrued expenses and liabilities
1,632

 
1,393

Total liabilities
1,328,292

 
1,231,062

 
 
 
 
NET ASSETS
 
 
 
Common stock, $0.01 par value; 200,000,000 shares authorized; 56,308,616 and 57,763,811 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively)
563

 
578

Paid-in capital in excess of par value
1,093,250

 
1,109,238

Offering costs
(1,633
)
 
(1,633
)
Total distributable earnings (loss)
(293,646
)
 
(151,712
)
Total net assets
$
798,534

 
$
956,471

NET ASSETS PER SHARE
$
14.18

 
$
16.56



Page | 5



TCG BDC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)
 
 
For the three month periods ended
 
 
March 31, 2020
 
December 31, 2019
Investment income:
 
 
 
 
From non-controlled/non-affiliated investments:
 
 
 
 
Interest income
 
$
41,465

 
$
44,945

Other income
 
2,344

 
1,279

Total investment income from non-controlled/non-affiliated investments
 
43,809

 
46,224

From controlled/affiliated investments:
 
 
 
 
Interest income
 
3,236

 
3,241

Dividend income
 
3,500

 
4,000

Total investment income from controlled/affiliated investments
 
6,736

 
7,241

Total investment income
 
50,545

 
53,465

Expenses:
 
 
 
 
Base management fees
 
7,386

 
7,702

Incentive fees
 
5,086

 
5,383

Professional fees
 
667

 
866

Administrative service fees
 
106

 
97

Interest expense
 
12,179

 
12,026

Credit facility fees
 
590

 
1,295

Directors’ fees and expenses
 
96

 
84

Other general and administrative
 
411

 
400

Total expenses
 
26,521

 
27,853

Net investment income (loss) before taxes
 
24,024

 
25,612

Excise tax expense
 
52

 
235

Net investment income (loss)
 
23,972

 
25,377

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments:
 
 
 
 
Net realized gain (loss) from:
 
 
 
 
Non-controlled/non-affiliated investments
 
(1,697
)
 
(20,685
)
Currency gains (losses) on non-investment assets and liabilities
 
(150
)
 
33

Net change in unrealized appreciation (depreciation) on investments:
 
 
 
 
Non-controlled/non-affiliated
 
(117,042
)
 
38,808

Non-controlled/affiliated
 

 
(6,607
)
Controlled/affiliated
 
(28,521
)
 
(7,745
)
Net change in unrealized currency gains (losses) on non-investment assets and liabilities
 
2,338

 
(2,345
)
Net realized gain (loss) and net change in unrealized appreciation (depreciation)
 
(145,072
)
 
1,459

Net increase (decrease) in net assets resulting from operations
 
$
(121,100
)
 
$
26,836

Basic and diluted earnings per common share
 
$
(2.12
)
 
$
0.46

Weighted-average shares of common stock outstanding—Basic and Diluted
 
57,112,193

 
58,784,971


Page | 6



About TCG BDC, Inc.
TCG BDC is an externally managed specialty finance company focused on lending to middle-market companies. TCG BDC is managed by Carlyle Global Credit Investment Management L.L.C., an SEC-registered investment adviser and a wholly owned subsidiary of The Carlyle Group Inc. Since it commenced investment operations in May 2013 through March 31, 2020, TCG BDC has invested approximately $5.9 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. TCG BDC’s investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies. TCG BDC has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.

Web: tcgbdc.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that involve substantial risks and uncertainties, including the impact of COVID-19 on the business. You can identify these statements by the use of forward-looking terminology such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. You should not place undue reliance on these forward-looking statements, which speak only as of the date on which we make it. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in filings we make with the Securities and Exchange Commission, and it is not possible for us to predict or identify all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contacts:
Investors:
Media:
Daniel Harris
Brittany Berliner
+1-212-813-4527
daniel.harris@carlyle.com
+1-212-813-4839
brittany.berliner@carlyle.com


Page | 7

View differences made from one to another to evaluate Tcg Bdc, Inc.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Tcg Bdc, Inc..

Continue

Assess how Tcg Bdc, Inc.'s management team is paid from their Annual Proxy

Definitive Proxy Statement (Form DEF 14A)
Screenshot example of actual Proxy Statement

Tcg Bdc, Inc.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2020 10-K Annual Report includes:

  • Voting Procedures
  • Board Members
  • Executive Team
  • Salaries, Bonuses, Perks
  • Peers / Competitors

Continue

SEC Filing Tools

Material Contracts, Statements, Certifications & more

Tcg Bdc, Inc. provided additional information to their SEC Filing as exhibits

Ticker: CGBD
CIK: 1544206
Form Type: 8-K Corporate News
Accession Number: 0001544206-20-000036
Submitted to the SEC: Tue May 05 2020 4:04:41 PM EST
Accepted by the SEC: Tue May 05 2020
Period: Tuesday, May 5, 2020
Industry: 1544206
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

External Resources:
Stock Quote
Social Media

Bookmark the Permalink:
https://last10k.com/sec-filings/cgbd/0001544206-20-000036.htm