425: BlackRock TCP Capital Corp. and BlackRock Capital Investment Corporation Announce Shareholder Approval of Merger

Shareholders of BlackRock TCP Capital Corp. and BlackRock Capital Investment Corporation overwhelmingly approved the proposed merger at a special meeting held on March 7, 2024.

Summary

• BlackRock TCP Capital Corp. (TCPC) and BlackRock Capital Investment Corporation (BCIC) announced that shareholders approved the merger at a special meeting on March 7, 2024.
• More than 90% of shareholders represented at each meeting voted in favor of the merger.
• The merger is expected to close as soon as practicable, subject to closing conditions.
• Following the merger, the surviving entity will continue as an indirect wholly-owned subsidiary of TCPC.
• TCPC will continue to trade on the Nasdaq Global Select Market under the ticker symbol TCPC.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the overwhelming shareholder approval of the merger and the optimistic outlook from management regarding the combined company's future prospects.

Positives

• Overwhelming shareholder support (more than 90%) indicates confidence in the merger's potential benefits.
• Management anticipates leveraging the combined company's scale to invest in middle-market companies, driving sustainable growth and value.
• The merger is seen as a strategic step in the growth of BlackRock's BDC platform, enhancing its ability to provide private credit products and services.

Risks

• The timing of the merger closing is uncertain.
• Expected synergies and savings associated with the merger may not be fully realized.
• The ability to realize the anticipated benefits of the merger, including the expected accretion to net investment income and the elimination or reduction of certain expenses and costs due to the Merger, is not guaranteed.
• Competing offers or acquisition proposals could be made.
• Any or all of the various conditions to the consummation of the Merger may not be satisfied or waived.
• Management's attention could be diverted from ongoing business operations.
• Stockholder litigation in connection with the Merger may result in significant costs of defense and liability.
• Changes in the economy, financial markets and political environment, including the impacts of inflation and rising interest rates, could negatively impact the merger.
• Possible disruption in the operations of BCIC and TCPC or the economy generally due to terrorism, war or other geopolitical conflict, natural disasters or public health crises and epidemics could negatively impact the merger.
• Future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) could negatively impact the merger.
• Conditions in BCIC's and TCPC's operating areas, particularly with respect to business development companies or regulated investment companies, could negatively impact the merger.

Future Outlook

The merger is expected to close as soon as practicable, subject to closing conditions. The combined company aims to leverage its scale to invest in attractive middle-market companies and drive sustainable growth and value for shareholders.

Management Comments

• Rajneesh Vig, Co-Head of US Private Capital (USPC) for BlackRock, and Chairman and CEO of BlackRock TCP Capital Corp., said: 'We thank shareholders of both BDCs for their overwhelming support for the merger. We are excited about the opportunity ahead to leverage the combined company's scale to further our strategy of investing in attractive middle market companies that we believe will drive sustainable growth and value for our shareholders.'
• James Keenan, Chief Investment Officer and Global Head of Private Debt for BlackRock, and Interim CEO of BlackRock Capital Investment Corporation, said: 'This transformational merger is a strategic next step in the growth and evolution of BlackRock's BDC platform, and it further enhances our ability to provide clients with industry-leading private credit products and services.'

Industry Context

The merger reflects a trend towards consolidation in the BDC sector, driven by the desire to achieve greater scale, improve operating efficiency, and enhance access to capital. Larger BDCs may have advantages in sourcing and managing investments, as well as in navigating regulatory complexities.

Comparison to Industry Standards

• Assessing the merger's success will involve comparing the combined company's performance against other large BDCs, such as Ares Capital Corporation (ARCC) and Owl Rock Capital Corporation (ORCC).
• Key metrics for comparison will include net investment income, portfolio yield, operating expenses, and total return to shareholders.
• The ability of the merged entity to generate superior risk-adjusted returns compared to its peers will be a critical measure of its success.

Stakeholder Impact

• Shareholders of both BCIC and TCPC are expected to benefit from the potential synergies and enhanced scale of the combined company.
• Clients of BlackRock may benefit from an enhanced ability to provide private credit products and services.
• Employees of both companies may experience changes as a result of the integration process.

Next Steps

• Satisfying the remaining closing conditions.
• Closing the merger as soon as practicable.
• Integrating the operations of BCIC into TCPC.
• Executing the investment strategy for the combined company.

Key Dates