BlackRock TCP Capital (TCPC) - 2022 Q4 - Annual Report

Financial Structure and Leverage - The Company has a leverage program consisting of $300 million in a revolving credit facility, $200 million in a senior secured revolving credit facility, $250 million in senior unsecured notes maturing in 2024, $325 million in senior unsecured notes maturing in 2026, and $160 million in committed leverage from the SBA[392]. - Total leverage outstanding as of December 31, 2022 was approximately $944.0 million, with available capacity of $286.1 million[436]. - The company has a Leverage Program with various covenants that, if not complied with, could accelerate repayment of debt, adversely affecting liquidity and financial condition[445]. - The company may face challenges in raising capital due to unfavorable economic conditions, which could limit its ability to renew or extend the Leverage Program[446]. Investment Strategy and Portfolio - The Company is regulated as a business development company (BDC) and must invest at least 70% of total assets in qualifying assets[395]. - The Company’s investment objective is to achieve high total returns through current income and capital appreciation, focusing on principal protection[390]. - The Company’s investment activities are influenced by factors such as the availability of capital for middle-market companies and the general economic environment[394]. - The Company’s investments include a significant portion in non-controlled affiliates, defined as ownership between 5% and 25% of outstanding voting securities[519]. - The Company’s investment strategy includes a focus on restricted securities and bank debt, which are subject to contractual restrictions[519]. Financial Performance - Investment income for the year ended December 31, 2022, totaled $181.0 million, reflecting an increase due to rising LIBOR/SOFR rates[423]. - Net investment income for the year ended December 31, 2022 was $88.4 million, an increase from $72.5 million in 2021, primarily due to higher total investment income[425]. - The company reported a net realized and unrealized loss of $97,663,505 for 2022, contrasting with a gain of $67,453,949 in 2021[487]. - The net increase in net assets resulting from operations for the year ended December 31, 2022 was $(9.2) million, attributed to higher realized and unrealized losses compared to gains[432]. Asset Valuation and Compliance - As of December 31, 2022, 84.3% of the Company's total assets were invested in qualifying assets, which include securities and indebtedness of private U.S. companies[395]. - The Company has elected to be treated as a regulated investment company (RIC) for U.S. federal income tax purposes, allowing it to avoid corporate level taxes on distributed income[391]. - The Company’s portfolio investments are valued at fair value based on approved policies and procedures, ensuring compliance with regulatory requirements[404]. - As of December 31, 2022, 94.0% of investments were categorized as Level 3, valued based on independent third-party sources[411]. Cash Flow and Liquidity - Net cash provided by operating activities during the year ended December 31, 2022 was $204.0 million, mainly from the settlement of dispositions of investments[442]. - Net cash used in financing activities was $141.1 million during the year ended December 31, 2022, primarily for repayment of unsecured notes and dividends paid[443]. - The Company had $82.4 million in cash and cash equivalents as of December 31, 2022, indicating liquidity position[444]. - Total cash and cash equivalents accounted for 11.1% of net assets, amounting to $82,435,171[518]. Dividends and Shareholder Returns - The board of directors declared a first quarter dividend of $0.32 per share payable on March 31, 2023, to stockholders of record as of March 17, 2023[459]. - The company paid dividends totaling $73,364,425 to shareholders in 2022, compared to $69,320,716 in 2021[489]. Market Conditions and Risks - The Company’s investment activities are influenced by factors such as the availability of capital for middle-market companies and the general economic environment[394]. - The annual impact on net investment income from a 300 basis point increase in interest rates is projected to be $36.1 million, equating to $0.62 per share[462]. - The company’s investments in foreign companies may involve special risks, including currency revaluation and less reliable information about issuers[581].