Key Points
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Net asset value declined to $14.49 per share from $15.60, largely due to unrealized markdowns tied to software-sector valuation pressure. Management said the markdowns generally did not reflect fundamental credit deterioration.
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The company continued to delever its balance sheet: borrowings fell to $286.1 million, gross leverage improved to 1.6 times, and asset coverage rose to 162%. After quarter-end, it expanded and amended its KeyBank facility to $150 million and used it to terminate the JPMorgan Great Lakes facility.
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Portfolio credit quality improved, with non-accrual investments falling to 5.7% of amortized cost from 6.2%. Investment activity remained selective, with $20.9 million of originations versus $34.9 million of repayments and sales, leaving the company in a net-repayment position.
BCP Investment Corporation reported second-quarter results marked by lower net asset value, continued deleveraging and an improvement in its non-accrual portfolio. Management also detailed a post-quarter-end amendment and expansion of its KeyBank credit facility, which was used to repay and terminate the company’s Great Lakes revolving credit facility with JPMorgan.
Chief Executive Officer Ted Goldthorpe said the company continued to strengthen its balance sheet, reposition its portfolio and improve asset coverage during the quarter. Total investment income was $15.2 million, while net investment income was $5.5 million, or $0.45 per share. Core net investment income totaled $3.3 million, or $0.27 per share.
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The company paid total distributions of $0.30 per share during the quarter, consisting of a $0.27 base distribution and a $0.03 supplemental distribution. It is paying monthly base distributions of $0.09 per share for July through September, and its board approved a fourth-quarter base distribution of $0.27 per share, payable in monthly $0.09 installments during October, November and December.
Net Asset Value Declines on Unrealized Marks
Net asset value fell to $179.5 million, or $14.49 per share, as of June 30, from $193 million, or $15.60 per share, at the end of the first quarter. Goldthorpe said the decline was predominantly driven by unrealized mark-to-market movements across the portfolio.
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Software investments represented about 34% of unrealized markdowns during the quarter, or about 47% when including software-exposed companies. Goldthorpe said management believed most of the markdowns reflected sector-specific valuation pressure and broader market dislocation rather than fundamental credit deterioration.
