425: BlackRock TCP Capital Corp. Addresses Stockholder Demand Letter with Supplemental Merger Disclosures

BlackRock TCP Capital Corp. voluntarily supplements its joint proxy statement regarding the proposed merger with BlackRock Capital Investment Corporation to address a stockholder demand letter, while reaffirming its belief that all material information has been disclosed.

Summary

• BlackRock TCP Capital Corp. (TCPC) has received a stockholder demand letter requesting supplemental disclosures to the joint proxy statement/prospectus regarding its proposed merger with BlackRock Capital Investment Corporation (BCIC).
• TCPC believes it has already disclosed all material information but is providing voluntary supplemental disclosures to reduce potential litigation costs, risks, and uncertainties.
• The TCPC Board, on the recommendation of the Special Committee, continues to unanimously recommend that TCPC stockholders vote for the merger proposal.
• The supplemental disclosures will not affect the merger consideration or the timing of the special meeting of TCPC stockholders, scheduled for March 7, 2024.
• The supplemental disclosures include estimated future quarterly dividends and NAV per share for both TCPC and BCIC through December 31, 2028.
• The disclosures also include selected companies analysis with corresponding financial data for both TCPC and BCIC.
• The discount rates used in the discounted dividend analysis for TCPC and BCIC were also supplemented.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company is addressing stockholder concerns and moving forward with the merger, the need for supplemental disclosures and the inherent risks associated with the transaction temper any strong positive sentiment.

Positives

• The TCPC Board is unanimously recommending that stockholders vote in favor of the merger, indicating confidence in the transaction.
• TCPC is proactively addressing stockholder concerns by providing supplemental disclosures, potentially mitigating litigation risks.
• The supplemental disclosures provide additional financial information, including dividend and NAV projections, which may help stockholders make informed decisions.

Negatives

• The stockholder demand letter suggests that some stockholders may have concerns about the merger or the disclosures made to date.
• The need for supplemental disclosures, even if voluntary, could indicate that the initial disclosures were not perceived as fully comprehensive.

Risks

• The document mentions several risks and uncertainties associated with the merger, including the timing of the closing, expected synergies, and the ability to realize anticipated benefits.
• There is a risk of stockholder litigation in connection with the merger, which could result in significant costs.
• Changes in the economy, financial markets, and political environment could impact the future performance of the combined company.
• The document also highlights risks associated with potential disruptions due to terrorism, war, natural disasters, or public health crises.

Future Outlook

The document contains forward-looking statements regarding the future performance and financial condition of TCPC, BCIC, and the combined company, including projections for operating results and distribution. These statements are subject to substantial risks and uncertainties.

Management Comments

• TCPC believes that it has previously disclosed all material information required to be disclosed to its stockholders.
• The TCPC Board continues to unanimously recommend that TCPC stockholders vote for the merger proposal.

Industry Context

The document provides a selected companies analysis, comparing TCPC and BCIC to other companies in the BDC sector based on metrics like price/net investment income per share, price/net asset value per share, and LQA dividend yield. This allows investors to benchmark the companies against their peers.

Comparison to Industry Standards

• The document compares TCPC and BCIC to other Business Development Companies (BDCs) such as Barings BDC, Inc., Bain Capital Specialty Finance, Inc., MidCap Financial Investment Corp., Carlyle Secured Lending, Inc., CION Investment Corporation, PennantPark Floating Rate Capital Ltd., Crescent Capital BDC, Inc., Fidus Investment Corporation, Gladstone Capital Corporation, WhiteHorse Finance, Inc., Stellus Capital Investment Corporation, Portman Ridge Finance Corporation and Monroe Capital Corporation.
• The comparison is based on metrics like Price/Net Investment Income Per Share (CY 2023E and CY 2024E), Price/6/30/2023 Net Asset Value Per Share, and LQA Dividend Yield.
• For example, TCPC's peers have LQA Dividend Yields ranging from 9.9% to 12.2%, while BCIC's peers have LQA Dividend Yields ranging from 8.5% to 14.3%.

Stakeholder Impact

• The merger will impact TCPC and BCIC stockholders, who will receive merger consideration.
• The merger could also impact employees of both companies, although the document does not provide specific details.
• The combined company's performance will affect its ability to pay dividends to stockholders.

Next Steps

• TCPC stockholders will vote on the merger proposal at a special meeting on March 7, 2024.
• The merger is subject to the satisfaction or waiver of various conditions.

Key Dates