BlackRock Kelso Capital Corporation Declares Regular Fourth Quarter Dividend of $0.43 per Share, Announces September 30, 2007 Quarterly Financial Results.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- BlackRock Kelso Capital Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BKCC BKCC BlackRock Kelso Capital Corporation (stock symbol) ) ("BlackRock Kelso" or the "Company") announced today that its Board of Directors has declared a fourth quarter dividend of $0.43 per share payable on December 31, 2007 to stockholders of record as of December 14, 2007. Based on the November 6, 2007 closing price of $13.21, the dividend represents an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. dividend yield of 13.02% on the Company's common stock. BlackRock Kelso also announced financial results for the quarter ended September 30, 2007. [TABLE OMITTED] Portfolio and Investment Activity During the three months ended September 30, 2007, we invested $124.0 million across five new and two existing portfolio companies. This compares to investing $190.9 million across 11 new and three existing portfolio companies for the three months ended September 30, 2006. Additionally, we received proceeds from sales/repayments of principal of approximately $90.8 million during the three months ended September 30, 2007, versus $33.4 million for the three months ended September 30, 2006. At September 30, 2007, our net portfolio consisted of 59 portfolio companies and was invested 67% in senior secured loans, 23% in unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. or subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". securities, 6% in equity investments, 4% in senior secured notes and less than 1% in cash, cash equivalents and foreign currency. Our average portfolio company investment by value was approximately $18.6 million. Our targeted investment size typically ranges from between $10 to $50 million, although this investment size may vary proportionately pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. as the size of our capital base changes. The weighted average yields on our senior secured loans and other debt securities were 12.3% and 13.0%, respectively, at September 30, 2007, versus 11.7% and 14.1%, respectively, at September 30, 2006. Our weighted average yield on invested capital was 12.5% at September 30, 2007, versus 12.0% at September 31, 2006. Yields on invested capital exclude common equity investments, short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments, cash and cash equivalents. On June 26, 2007, we priced our initial public offering, through which we sold 10,000,000 newly issued shares and raised $150.1 million, net of underwriting commissions Underwriting Commission The fee investment bankers charge for underwriting a security issue. and expenses. The transaction closed on July 2, 2007. We applied the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of this offering to reduce borrowings outstanding under our credit facility. "We are pleased with our third quarter results," said James R. Maher, Chairman and Chief Executive Officer. "We continue to deliver on our goals of being a premier provider of capital to middle-market companies and providing an attractive return to our stockholders. We view recent turbulence turbulence, state of violent or agitated behavior in a fluid. Turbulent behavior is characteristic of systems of large numbers of particles, and its unpredictability and randomness has long thwarted attempts to fully understand it, even with such powerful tools as in the credit markets as an opportunity for us to continue to apply our thorough investment selection process to enhance the risk/return profile of our portfolio." Results of Operations Results comparisons are for the three and nine months ended September 30, 2007 and September 30, 2006. Investment Income Investment income totaled $34.2 million and $92.4 million, respectively, for the three months and nine months ended September 30, 2007, compared to $15.1 million and $36.0 million, respectively, for the three months and nine months ended September 30, 2006. The increase in investment income for the three and nine months ended September 30, 2007 reflects the growth of our portfolio and the transition of the portfolio from temporary to long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments, as the portfolio was not yet fully invested in the prior periods. Origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real , closing and/or commitment fees associated with investments in portfolio companies are accreted into interest income over the respective terms of the applicable loans. Expenses Net expenses for the three months and nine months ended September 30, 2007 were $11.8 million and $38.7 million, respectively, versus $4.1 million and $8.3 million, respectively, for the three months and nine months ended September 30, 2006. Of these totals, for the three and nine months ended September 30, 2007, ($0.1) million and $9.4 million, respectively, were performance-based incentive fees and $5.3 million and $14.5 million, respectively, were interest and other credit facility expenses. For each of the three and nine months ended September 30, 2006, $1.3 million were performance-based incentive fees and there were no interest and other credit facility expenses. Expenses net of performance-based incentive fees and interest and other credit facility expenses for the three and nine months ended September 30, 2007 were $6.6 million and $16.9 million, respectively. Net expenses for the three months and nine months ended September 30, 2007 were net of base management fee waivers of zero and $2.1 million, versus $0.9 million and $3.6 million, respectively, for the three months and nine months ended September 30, 2006. The base management fee waivers terminated upon the completion of our initial public offering. These net expenses consist of base management fees (net of waivers), administrative services expenses, professional fees, director fees, investment advisor Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission. 2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and expenses, insurance expenses, amortization of debt issuance costs and miscellaneous other expenses. The increase in expenses was driven primarily by an increase in base management fees resulting from the growth of our portfolio, the incurrence In`cur´rence n. 1. The act of incurring, bringing on, or subjecting one's self to (something troublesome or burdensome); as, the incurrence of guilt, debt, responsibility, etc. s> Noun 1. of performance-based incentive fees and the incurrence of borrowing costs under our credit facility. No incentive fees were earned during the three months ended September 30, 2007 primarily as a result of the increase in unrealized depreciation on investments. Net Investment Income Net investment income totaled $22.4 million and $53.7 million, or $0.44 per share and $1.23 per share, respectively, for the three and nine months ended September 30, 2007. For the three and nine months ended September 30, 2006, net investment income totaled $11.0 million and $27.7 million, or $0.30 per share and $0.76 per share, respectively. Net Realized Gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. (Losses) Total net realized gains (losses) for the three and nine months ended September 30, 2007 were $0.3 million and $0.6 million, respectively, compared to $0.1 million and ($0.1) million, respectively, for the three and nine months ended September 30, 2006. Net Unrealized Appreciation (Depreciation) For the three and nine months ended September 30, 2007, the net change in unrealized appreciation on our investments, foreign currency translations and cash equivalents was ($20.2) million and ($22.2) million, respectively, versus $0.3 million and $2.1 million, respectively, for the three and nine months ended September 30, 2006. Net unrealized appreciation (depreciation) was ($20.8) million at September 30, 2007 and $2.3 million at September 30, 2006. The net change in unrealized appreciation was primarily a result of declines in market quotations used to value certain investments in our portfolio. Net Increase in Net Assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. from Operations For the three months and nine months ended September 30, 2007, the net increase in net assets from operations was $2.5 million and $32.1 million, or $0.05 per share and $0.74 per share, respectively, compared to $11.4 million and $29.7 million, or $0.31 per share and $0.82 per share, respectively, for the three and nine months ended September 30, 2006. Liquidity and Capital Resources Our liquidity and capital resources are generated primarily through a senior secured, multi-currency $500 million, four-year revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility maturing in December 2010 as well as from cash flows from our operations, which primarily consists of interest earned and fees received on senior secured loans and other debt securities. At September 30, 2007, we had $346.4 million in borrowings outstanding and $153.6 million available for use under our credit facility. On June 26, 2007, we priced our initial public offering, through which we sold 10,000,000 newly issued shares and raised $150.1 million, net of underwriting commissions and expenses, in a transaction that closed on July 2, 2007. In the future, we may raise additional equity or debt capital in the public or private markets or may securitize Securitize The practice of a company selling accounts receivables or other debts owed to it. The third party that buys the debt assumes ownership of it and the responsibility for collecting the debts, and keeps the repayments when made. a portion of our investments. The primary use of such funds is expected to be investments in portfolio companies, cash distributions to common stockholders and for other general corporate purposes. Dividends Dividends paid to stockholders for the three and nine months ended September 30, 2007 totaled $21.5 million, or $0.42 per share, and $54.7 million, or $1.26 per share, respectively. For the three and nine months ended September 30, 2006, dividends paid totaled $11.1 million, or $0.30 per share, and $26.6 million, or $0.73 per share, respectively. Tax characteristics of all dividends will be reported to stockholders on Form 1099 after the end of the calendar year. We have elected to be taxed as a regulated investment company Regulated investment company An investment company allowed to pass capital gains, dividends, and interest earned on fund investments directly to its shareholders so that it is taxed only at the personal level, and double taxation is avoided. under Subchapter M Subchapter M An IRS regulation dealing with investment companies and real estate investment trusts that avoid double taxation by distributing interest, dividends, and capital gains directly to shareholders, who are taxed individually. of the Internal Revenue Code The Internal Revenue Code is the body of law that codifies all federal tax laws, including income, estate, gift, excise, alcohol, tobacco, and employment taxes. These laws constitute title 26 of the U.S. Code (26 U.S.C.A. § 1 et seq. . To maintain our status as a regulated investment company, we must distribute annually to our stockholders at least 90% of our investment company taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. and at least 98% of our income (both ordinary income and net capital gains) to avoid an excise tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. . We intend to make distributions to our stockholders on a quarterly basis of substantially all of our taxable net investment income. We also intend to make distributions of net realized capital gains, if any, at least annually. We may not be able to achieve operating results that will allow us to make dividends and distributions at a specific level or to increase the amount of these dividends and distributions from time to time. In addition, we may be limited in our ability to make dividends and distributions due to the asset coverage test for borrowings when applicable to us as a business development company under the Investment Company Act of 1940 and due to provisions in our credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities . If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of our status as a regulated investment company. We cannot assure stockholders that they will receive dividends and distributions at any particular level or at all. With respect to the dividends paid to stockholders, income from origination, structuring, closing, commitment and other upfront fees associated with investments in portfolio companies in which our investment advisor on our behalf provides significant services to the portfolio company in connection with making the investment is treated as taxable income and accordingly, distributed to stockholders. For the three and nine months ended September 30, 2007, these fees totaled $1.5 million and $5.3 million, respectively. For the three and nine months ended September 30, 2006, such fees totaled $1.6 million and $2.2 million, respectively. Conference Call BlackRock Kelso will host a webcast/teleconference call at 5:00 p.m. (Eastern Time) on Wednesday, November 7, 2007 to discuss its third quarter 2007 financial results. All interested parties are welcome to participate. You can access the teleconference by dialing, from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , (800) 374-0176, or from outside the United States, (706) 679-3431, shortly before 5:00 p.m. and referencing the BlackRock Kelso Capital Corporation Conference Call (ID Number 21618200). A live, listen-only webcast will also be available via the investor relations Investor relations The process by which the corporation communicates with its investors. section of www.blackrockkelso.com. Both the teleconference and webcast will be available for replay by 8:00 p.m. on Wednesday, November 7, 2007 and ending at midnight on Wednesday, November 14, 2007. To access the replay of the teleconference, callers from the United States should dial (800) 642-1687 and callers from outside the United States should dial (706) 645-9291 and enter the Conference ID Number 21618200. To access the webcast, please visit the investor relations section of www.blackrockkelso.com. [TABLE OMITTED] [TABLE OMITTED] * Certain amounts have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current periods' presentation. About BlackRock Kelso Capital Corporation BlackRock Kelso Capital Corporation is a business development company formed in early 2005 by its management team, BlackRock, Inc. and principals of Kelso & Company, to provide debt and equity capital to middle-market companies. The Company's investment objective is to generate both current income and capital appreciation through debt and equity investments. The Company invests primarily in middle-market companies in the form of senior and junior secured and unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. securities and loans, each of which may include an equity component, and by making direct preferred, common and other equity investments in such companies. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release, and other statements that BlackRock Kelso Capital may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and , with respect to BlackRock Kelso Capital's future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate," "current," "intention," "estimate," "position," "assume," "outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. The information contained on our website is not a part of this press release. BlackRock Kelso Capital cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and BlackRock Kelso Capital assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. In addition to factors previously disclosed in BlackRock Kelso Capital's Securities and Exchange Commission (SEC) reports and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies; (2) changes in political, economic or industry conditions, the interest rate environment or financial and capital markets; (3) our relative and absolute investment performance; (4) the impact of increased competition; (5) the unfavorable resolution of legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. that may occur; (6) the extent and timing of any share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. ; (7) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc BlackRock Kelso Capital or its service providers; (8) terrorist activities and international hostilities; and (9) the impact of changes to tax legislation and, generally, the tax position of the Company. BlackRock Kelso Capital's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2006 and the Company's subsequent reports filed with the SEC identify additional factors that can affect forward-looking statements. Available Information BlackRock Kelso Capital Corporation's filings with the SEC, press releases, earnings releases and other financial information are available on its website at www.blackrockkelso.com |
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