TCPC 10-Q Quarter ended June 30, 2022

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended June 30, 2022

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Delaware

56-2594706

(State or Other Jurisdiction of Incorporation)

(IRS Employer Identification No.)

2951 28th Street, Suite 1000

Santa Monica, California

90405

(Address of Principal Executive Offices)

(Zip Code)

Common Stock, par value $0.001 per share

TCPC

NASDAQ Global Select Market

(Title of each class)

(Trading Symbol(s) )

(Name of each exchange where registered)

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller Reporting company

☐

Emerging growth company

☐

Part I.

Financial Information

Item 1.

Financial Statements

Consolidated Statements of Assets and Liabilities as of June 30, 2022 (unaudited) and December 31, 2021

2

Consolidated Statements of Operations for the three and six months ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)

3

Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)

4

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)

5

Consolidated Schedule of Investments as of June 30, 2022 (unaudited) and December 31, 202 1

6

Notes to Consolidated Financial Statements (unaudited)

25

Consolidated Schedule of Changes in Investments in Affiliates for the six months ended June 30, 2022 (unaudited) and year ended December 31, 2021

51

Consolidated Schedule of Restricted Securities of Unaffiliated Issuers as of June 30, 2022 (unaudited) and December 31, 2021

55

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

57

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

71

Item 4.

Controls and Procedures

72

Part II.

Other Information

Item 1.

Legal Proceedings

73

Item 1A.

Risk Factors

73

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

75

Item 3.

Defaults upon Senior Securities

75

Item 4.

Mine Safety Disclosures

75

Item 5.

Other Information

75

Item 6.

Exhibits

76

June 30, 2022

December 31, 2021

(unaudited)

Assets

Investments, at fair value:

Non-controlled, non-affiliated investments (cost of $1,604,408,340 and $1,637,897,868, respectively)

$

1,596,714,296

$

1,638,843,507

Non-controlled, affiliated investments (cost of $35,434,309 and $37,457,524, respectively)

88,026,099

97,207,404

Controlled investments (cost of $148,235,500 and $146,247,518, respectively)

112,137,370

105,087,211

Total investments (cost of $1,788,078,149 and $1,821,602,910, respectively)

1,796,877,765

1,841,138,122

Cash and cash equivalents

49,427,039

19,552,273

Interest, dividends and fees receivable

19,336,843

20,061,104

Deferred debt issuance costs

4,196,842

4,786,736

Receivable for investments sold

234,473

6,024,981

Prepaid expenses and other assets

2,440,617

2,666,111

Total assets

1,872,513,579

1,894,229,327

Liabilities

Debt (net of deferred issuance costs of $5,914,022 and $6,878,110, respectively)

1,041,901,416

1,012,461,340

Interest and debt related payables

9,606,527

10,863,683

Management fees payable

6,317,926

6,304,176

Incentive fees payable

4,511,860

3,742,443

Reimbursements due to the Advisor

1,305,542

942,094

Payable for investments purchased

17,062

28,994,390

Accrued expenses and other liabilities

1,849,172

1,464,565

Total liabilities

1,065,509,505

1,064,772,691

Commitments and contingencies (Note 5)

Net assets

$

807,004,074

$

829,456,636

Composition of net assets applicable to common shareholders

Common stock, $0.001 par value; 200,000,000 shares authorized, 57,767,264 and

57,767,264 shares issued and outstanding as of June 30, 2022 and

December 31, 2021, respectively

$

57,767

$

57,767

Paid-in capital in excess of par

963,100,315

966,409,911

Distributable earnings (loss)

(156,154,008

)

(137,011,042

)

Total net assets

807,004,074

829,456,636

Total liabilities and net assets

$

1,872,513,579

$

1,894,229,327

Net assets per share

$

13.97

$

14.36

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Investment income

Interest income (excluding PIK):

Non-controlled, non-affiliated investments

$

37,218,468

$

37,070,947

$

74,646,423

$

70,924,259

Non-controlled, affiliated investments

33,936

33,471

67,044

59,568

Controlled investments

1,823,155

1,674,786

3,735,659

3,324,819

PIK income:

Non-controlled, non-affiliated investments

2,004,691

989,930

3,084,896

2,294,631

Dividend income:

Non-controlled, non-affiliated investments

225,854

178,767

487,083

998,122

Non-controlled, affiliated investments

580,300

1,127,927

1,143,704

2,824,587

Controlled investments

1,850,074

252,851

2,563,899

1,144,901

Other income:

Non-controlled, non-affiliated investments

173,256

164,036

325,733

211,154

Non-controlled, affiliated investments

45,651

151,968

51,853

1,026,544

Total investment income

43,955,385

41,644,683

86,106,294

82,808,585

Operating expenses

Interest and other debt expenses

9,369,209

10,712,356

18,714,413

20,818,243

Management fees

6,606,166

6,425,571

13,273,893

12,368,933

Incentive fees

4,511,860

4,548,446

8,702,090

9,239,904

Administrative expenses

444,036

428,857

921,095

968,804

Professional fees

409,993

579,926

980,388

870,260

Director fees

236,113

295,200

459,113

545,200

Insurance expense

181,062

150,000

362,123

285,000

Custody fees

76,593

85,008

160,522

144,191

Other operating expenses

850,155

652,133

1,508,519

1,359,478

Total operating expenses

22,685,187

23,877,497

45,082,156

46,600,013

Net investment income before taxes

21,270,198

17,767,186

41,024,138

36,208,572

Net investment income

21,270,198

17,767,186

41,024,138

36,208,572

Realized and unrealized gain (loss) on investments and foreign currency

Net realized gain (loss):

Non-controlled, non-affiliated investments

(29,415,029

)

(236,632

)

(29,368,762

)

1,842,683

Non-controlled, affiliated investments

11,048,248

—

11,048,248

1,028,057

Controlled investments

—

—

(124,801

)

—

Net realized gain (loss)

(18,366,781

)

(236,632

)

(18,445,315

)

2,870,740

Net change in unrealized appreciation (depreciation):

Non-controlled, non-affiliated investments

1,417,267

(3,058,802

)

(8,162,024

)

4,299,422

Non-controlled, affiliated investments

(4,318,514

)

40,751,395

(7,158,091

)

48,541,962

Controlled investments

(130,245

)

(396,596

)

5,062,177

(1,609,324

)

Net change in unrealized appreciation (depreciation)

(3,031,492

)

37,295,997

(10,257,938

)

51,232,060

Net realized and unrealized gain (loss)

(21,398,273

)

37,059,365

(28,703,253

)

54,102,800

Net increase (decrease) in net assets resulting from operations

$

(128,075

)

$

54,826,551

$

12,320,885

$

90,311,372

Basic and diluted earnings (loss) per share

$

(0.00

)

$

0.95

$

0.21

$

1.56

Basic and diluted weighted average common shares outstanding

57,767,264

57,767,264

57,767,264

57,767,264

Common Stock

Shares

Par Amount

Paid in Capital

in Excess of Par

Distributable

earnings (loss)

Total Net

Assets

Balance at December 31, 2021

57,767,264

$

57,767

$

966,409,911

$

(137,011,042

)

$

829,456,636

Cumulative effect adjustment for the adoption of ASU 2020-06 ⁽¹⁾

—

—

(3,309,596

)

3,196,507

(113,089

)

Net investment income

—

—

—

19,753,940

19,753,940

Net realized and unrealized gain (loss)

—

—

—

(7,304,980

)

(7,304,980

)

Dividends paid to shareholders

—

—

—

(17,330,179

)

(17,330,179

)

Balance at March 31, 2022

57,767,264

$

57,767

$

963,100,315

$

(138,695,754

)

$

824,462,328

Net investment income

—

—

—

21,270,198

21,270,198

Net realized and unrealized gain (loss)

—

—

—

(21,398,273

)

(21,398,273

)

Dividends paid to shareholders

—

—

—

(17,330,179

)

(17,330,179

)

Balance at June 30, 2022

57,767,264

$

57,767

$

963,100,315

$

(156,154,008

)

$

807,004,074

Common Stock

Shares

Par Amount

Paid in Capital

in Excess of Par

Distributable

earnings (loss)

Total Net

Assets

Balance at December 31, 2020

57,767,264

$

57,767

$

979,973,202

$

(215,044,391

)

$

764,986,578

Net investment income

—

—

—

18,441,386

18,441,386

Net realized and unrealized gain (loss)

—

—

—

17,043,436

17,043,436

Dividends paid to shareholders

—

—

—

(17,330,179

)

(17,330,179

)

Balance at March 31, 2021

57,767,264

$

57,767

$

979,973,202

$

(196,889,748

)

$

783,141,221

Net investment income

—

—

—

17,767,186

17,767,186

Net realized and unrealized gain (loss)

—

—

—

37,059,365

37,059,365

Dividends paid to shareholders

—

—

—

(17,330,179

)

(17,330,179

)

Balance at June 30, 2021

57,767,264

$

57,767

$

979,973,202

$

(159,393,376

)

$

820,637,593

(1)

See Note 2 and Note 4 for further information related to the adoption of ASU 2020-06.

Six Months Ended June 30,

2022

2021

Operating activities

Net increase (decrease) in net assets resulting from operations

$

12,320,885

$

90,311,372

Adjustments to reconcile net increase (decrease) in net assets resulting

from operations to net cash provided by (used in) operating activities:

Net realized (gain) loss

18,445,315

(2,870,740

)

Change in net unrealized (appreciation) depreciation of investments

10,735,596

(51,112,627

)

Net amortization of investment discounts and premiums

(5,467,347

)

(4,576,820

)

Amortization of original issue discount on debt

97,721

721,798

Interest and dividend income paid in kind

(3,084,896

)

(2,294,631

)

Amortization of deferred debt issuance costs

1,553,981

1,843,293

Changes in assets and liabilities:

Purchases of investments

(211,990,085

)

(415,957,330

)

Proceeds from disposition of investments

235,621,774

280,320,010

Decrease (increase) in interest, dividends and fees receivable

724,261

(4,899,681

)

Decrease (increase) in receivable for investments sold

5,790,508

(12,140,404

)

Decrease (increase) in prepaid expenses and other assets

225,494

667,226

Increase (decrease) in payable for investments purchased

(28,977,328

)

12,619,629

Increase (decrease) in incentive fees payable

769,417

(472,351

)

Increase (decrease) in interest and debt related payables

(1,257,156

)

2,000,296

Increase (decrease) in reimbursements due to the Advisor

363,448

(367,411

)

Increase (decrease) in management fees payable

13,750

533,439

Increase (decrease) in accrued expenses and other liabilities

384,607

(35,161

)

Net cash provided by (used in) operating activities

36,269,945

(105,710,093

)

Financing activities

Draws on credit facilities

400,431,901

414,801,114

Repayments of credit facility draws

(232,166,722

)

(448,047,140

)

Payments of debt issuance costs

—

(2,798,136

)

Dividends paid to shareholders

(34,660,358

)

(34,660,358

)

Repayment of convertible notes

(140,000,000

)

—

Proceeds from issuance of unsecured notes

—

174,289,500

Net cash provided by (used in) financing activities

(6,395,179

)

103,584,980

Net increase (decrease) in cash and cash equivalents (including restricted cash)

29,874,766

(2,125,113

)

Cash and cash equivalents (including restricted cash) at beginning of period

19,552,273

20,006,580

Cash and cash equivalents (including restricted cash) at end of period

$

49,427,039

$

17,881,467

Supplemental cash flow information

Interest payments

$

17,920,525

$

15,448,562

Issuer

Instrument

Ref

Floor

Spread

Total

Coupon

Maturity

Principal

Cost

Fair

Value

% of Total

Cash and

Investments

Notes

Debt Investments ^(A)

Aerospace and Defense

Unanet, Inc.

First Lien Delayed Draw Term Loan

LIBOR(M)

—

6.25

%

7.88

%

5/31/2024

$

5,127,551

$

5,103,318

$

5,127,551

0.28

%

N

Unanet, Inc.

First Lien Term Loan

LIBOR(M)

—

6.25

%

7.94

%

5/31/2024

$

19,897,959

19,813,510

19,897,959

1.08

%

N

Unanet, Inc.

Sr Secured Revolver

LIBOR(M)

—

6.25

%

7.94

%

5/31/2024

$

2,448,980

2,439,271

2,448,980

0.13

%

N

27,356,099

27,474,490

1.49

%

Airlines

Epic Aero, Inc.

Unsecured Notes

Fixed

—

—

2.00

%

12/31/2022

$

3,233,572

3,233,572

3,162,433

0.17

%

E/N

Mesa Airlines, Inc.

First Lien Incremental Term Loan

LIBOR(M)

2.00

%

5.00

%

7.00

%

9/27/2023

$

885,040

881,399

875,305

0.05

%

N

Mesa Airlines, Inc.

First Lien Term Loan

LIBOR(M)

2.00

%

5.00

%

7.00

%

6/5/2023

$

6,195,282

6,175,001

6,151,915

0.33

%

N

10,289,972

10,189,653

0.55

%

Automobiles

ALCV Purchaser, Inc. (AutoLenders)

First Lien Term Loan

LIBOR(M)

1.00

%

6.75

%

8.38

%

4/15/2026

$

6,819,161

6,738,881

6,819,161

0.37

%

G/N

ALCV Purchaser, Inc. (AutoLenders)

First Lien Revolver

LIBOR(M)

1.00

%

6.75

%

8.38

%

4/15/2026

$

513,805

506,236

513,805

0.03

%

G/N

Autoalert, LLC

First Lien Incremental Term Loan

SOFR(Q)

—

8.75% Cash + 0.25% PIK

9.80

%

1/1/2023

$

59,393,472

59,318,554

53,365,035

2.89

%

N

66,563,671

60,698,001

3.29

%

Building Products

Porcelain Acquisition Corporation (Paramount)

First Lien Term Loan

LIBOR(Q)

1.00

%

5.75

%

8.00

%

4/30/2027

$

6,206,968

6,101,986

6,200,761

0.34

%

N

Porcelain Acquisition Corporation (Paramount)

First Lien Delayed Draw Term Loan

LIBOR(Q)

1.00

%

5.75

%

8.00

%

4/30/2027

$

967,320

951,498

966,352

0.05

%

N

7,053,484

7,167,113

0.39

%

Capital Markets

Pico Quantitative Trading, LLC

First Lien Term Loan (1.0% Exit Fee)

LIBOR(Q)

1.50

%

7.25

%

9.00

%

2/7/2025

$

21,791,007

21,240,089

22,008,917

1.19

%

L/N

Pico Quantitative Trading, LLC

First Lien Incremental Term Loan

LIBOR(S)

1.50

%

7.25

%

8.75

%

2/7/2025

$

24,415,870

23,364,870

24,415,870

1.32

%

N

44,604,959

46,424,787

2.51

%

Commercial Services & Supplies

Thermostat Purchaser III, Inc. (Reedy Industries)

Second Lien Term Loan

LIBOR(Q)

0.75

%

7.25

%

8.82

%

8/31/2029

$

7,767,802

7,660,264

7,457,090

0.40

%

N

Thermostat Purchaser III, Inc. (Reedy Industries)

Second Lien Delayed Draw Term Loan

LIBOR(Q)

0.75

%

7.25

%

8.82

%

8/31/2029

$

—

(8,931

)

(53,170

)

—

K/N

7,651,333

7,403,920

0.40

%

Communications Equipment