Blackrock Tcp Capital NASDAQ: TCPC reported a decline in third-quarter net asset value and held back on new investments as it preserved cash during a review of strategic alternatives.
Net asset value fell to $5.61 per share at September 30, 2026, from $6.58 at the end of the prior quarter. Chairman and CEO Jason Mehring said the largest factor was a $0.68-per-share impact from the sale of approximately $524 million of investments to a continuation vehicle sponsored by Pantheon.
The company ended the quarter with approximately $253 million in cash after the portfolio sale and $224 million of repayment and realization activity. Mehring said Blackrock TCP Capital does not intend to maintain that level of cash over the long term but is keeping liquidity available while its board evaluates alternatives.
Strategic Review Continues
Mehring said the board’s review, for which it engaged Keefe, Bruyette & Woods, had not reached a definitive outcome. He declined to give a timeline for its completion, saying the company was working to be both efficient and thorough.
During the question-and-answer session, Raymond James analyst Robert Dodd asked how the company might structure its portfolio if it remained independent. Mehring cautioned against speculating but said any resumption of investing would probably be consistent with the company’s recent approach of building a more granular portfolio focused on the top of the capital stack. He said the ultimate direction would depend on the board’s review.
The continuation vehicle also assumed $405 million of collateralized loan obligation debt issued in the second quarter. Subsequent repayments further reduced net regulatory leverage to 0.16 times at quarter end, compared with an estimated 0.4 times on a pro forma basis following the transaction, CFO Erik Cuellar said.
Earnings and Dividend
Third-quarter net investment income was $13.4 million, or $0.16 per share. Adjusted net investment income was $12.5 million, or $0.15 per share, below the $0.17-per-share dividend paid for the quarter. The adjusted measure excludes amortization of the purchase accounting discount resulting from the company’s merger with BCIC.
Total investment income was $28.5 million, while operating expenses were $15.1 million. Cuellar said payment-in-kind income represented 8.8% of total investment income, up from 7.6% in the second quarter.
On November 5, the board declared a fourth-quarter dividend of $0.17 per share, payable December 31 to shareholders of record on December 17. Mehring said the board would continue to evaluate the dividend in the context of the strategic review.
Net realized losses totaled $75.8 million, including $56.7 million related to the portfolio sale. Net unrealized losses were $4.3 million, primarily reflecting an $11.5 million markdown in Job&Talent, partly offset by the reversal of previous unrealized losses associated with the sale.
Smaller Portfolio, Higher Concentration
President Dan Worrell said the sale and repayments left the company with a smaller, more concentrated portfolio. At quarter end, investments had a fair value of $544 million across 126 companies. First-lien senior secured loans represented 79.6% of the portfolio, while 36th Street Capital, an equipment leasing business, was the largest investment at 19.3%.
New investment activity totaled $6.2 million and consisted primarily of follow-on investments in existing portfolio companies. Full realizations during the quarter included Domo, Motive Technologies, Pico and ESO Solutions, Worrell said.
Non-accrual investments declined in dollar terms to $18.5 million at fair value from $20.6 million at the end of June. As a percentage of the smaller portfolio, however, non-accruals rose to 3.4% at fair value from 1.6%. Worrell attributed the increase primarily to the portfolio sale and repayments of predominantly performing loans.
Job&Talent remained on accrual but was the largest contributor to unrealized losses during the quarter. Mehring said the company was evaluating strategic alternatives and that Blackrock TCP Capital’s quarter-end valuation reflected the latest information available from that process.
About Blackrock Tcp Capital (NASDAQ:TCPC)
BlackRock TCP Capital Corp. NASDAQ: TCPC is a business development company that provides financing to middle-market companies. The company primarily invests in privately negotiated senior secured loans, subordinated debt and other debt securities, while also making select equity investments. Its portfolio companies operate across a range of industries.
The company seeks to generate current income and, to a lesser extent, capital appreciation by investing in established businesses that may require financing for acquisitions, recapitalizations, refinancing, growth initiatives and other corporate purposes.
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