8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 4, 2020

 

 

Crescent Capital BDC, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   47-3162282

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

11100 Santa Monica Blvd., Suite 2000, Los Angeles, CA   90025
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 235-5900

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to 12(b) of the Act:

 

Title of each class

 

Trading

Symbol

 

Name of each exchange

on which registered

Common Stock, $0.001 par value per share   CCAP   The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001 per share

(Title of class)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

 

 

 


Item 2.02.

Results of Operations and Financial Condition.

On March 4, 2020, the Registrant issued a press release announcing its financial results for the quarter ended December 31, 2019 and declared a dividend of $0.41 per share payable on April 15, 2020 to stockholders of record at the close of business on March 31, 2020. The text of the press release is included as Exhibit 99.1 to this Form 8-K.

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

Number

  

Description

99.1    Press Release, dated March 4, 2020

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

 

   CRESCENT CAPITAL, BDC, INC.
Date: March 4, 2020    By:   

/s/ Gerhard Lombard

   Name:    Gerhard Lombard
   Title:    Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

Crescent Capital BDC, Inc. Reports Fourth Quarter and Full Year 2019 Financial Results and

Declares Regular Dividend for First Quarter 2020

LOS ANGELES—March 4, 2020-Crescent Capital BDC, Inc. (“Crescent BDC” or “Company” which may also be referred to as “we,” “us” or “our”) (NASDAQ: CCAP) today reported results for the fourth quarter and full year ended December 31, 2019. For the fourth quarter, net investment income was $8.3 million, or $0.41 per share, and the net increase in net assets was $9.2 million, or $0.45 per share. For the year, net investment income was $31.7 million, or $1.83 per share. Reported net asset value per share was $19.50 at December 31, 20191 as compared to $19.48 at September 30, 2019.

Declaration of Regular Dividend for First Quarter 2020

The Company’s Board of Directors (the “Board”) has declared a regular cash dividend for the first quarter 2020 of $0.41 per share, which will be paid on or about April 15, 2020 to stockholders of record as of the close of business on March 31, 2020.

Acquisition of Alcentra Capital Corporation

On January 31, 2020, the Company completed its previously announced acquisition of Alcentra Capital Corporation (“Alcentra Capital”) (formerly NASDAQ: ABDC). With the closing of the merger, Crescent BDC began trading on the NASDAQ under the ticker symbol “CCAP” on February 3, 2020.

Stock Repurchase Program

On March 2, 2020, the Company’s previously authorized stock repurchase program commenced and will be in effect through January 31, 2021, unless extended, or until the aggregate approved repurchase amount has been expended. Crescent BDC may repurchase up to $20 million in the aggregate of its outstanding common stock in the open market at any time the shares are traded below 90% of Crescent BDC’s most recently disclosed combined net asset value.

Proposed Reduced Asset Coverage

On March 3, 2020, the Company’s Board recommended that stockholders approve a proposal to reduce the Company’s required minimum asset coverage ratio applicable to business development companies under the Investment Company Act of 1940, as amended (the “1940 Act”) from 200% to 150%. The Company expects to hold its Annual Meeting in May 2020, at which time stockholders will vote, amongst other items, on this proposal.

In addition, the Board unanimously approved the application of the modified asset coverage requirements to be effective one year after such Board approval and as a result, the Company’s asset coverage requirements for senior securities will be changed from 200% to 150%, effective March 3, 2021. However, if the stockholder proposal is passed at the Annual Meeting, the Company would be subject to the modified asset coverage requirements the day after the Annual Meeting.

Selected Financial Highlights

(Amounts in millions, except per share amounts)

 

     Three Months Ended      Year Ended  
     12/31/2019      12/31/2018      12/31/2019      12/31/2018  

Net investment income per share

   $  0.41      $ 0.47      $ 1.83      $ 1.65  

Net realized and unrealized gain (loss) per share, net of taxes

   $ 0.04      $ (0.61    $ (0.14    $ (0.89

Net increase in net assets resulting from operations per share

   $ 0.45      $ (0.14    $ 1.69      $ 0.76  

Dividend distributions per share

   $ 0.41      $ 0.40      $ 1.64      $ 1.47  

Total investment income

   $ 14.7      $ 10.5      $ 53.5      $ 33.3  

Net investment income

   $ 8.3      $ 6.0      $ 31.7      $ 17.7  

Net increase in net assets resulting from operations    

   $ 9.2      $ (1.8    $ 29.3      $ 8.1  

 

1 

Reported net asset value per share does not give effect to the combination with Alcentra Capital Corporation, which occurred on January 31, 2020.


LOGO

 

     As of December 31,  
     2019     2018  

Total investments, at fair value

   $ 726.5     $ 493.3  

Total assets

   $ 747.2     $ 505.4  

Net asset value per share

   $ 19.50     $ 19.43  

Pro forma combined net asset value per share 2

   $ 19.42       n/a  

Weighted average yield of debt and other income producing securities (at cost)

     8.4     9.0

Percentage of debt bearing a floating rate at fair value

     97.9     95.2

Portfolio & Investment Activity

As of December 31, 2019 and December 31, 2018, the Company had investments in 98 and 86 portfolio companies with an aggregate fair value of $726.5 million and $493.3 million, respectively. The portfolio at fair value was comprised of the following asset types:

 

     December 31, 2019     December 31, 2018  

($ in millions)

   Fair Value      Percentage     Fair Value      Percentage  

Senior secured first lien

   $ 351.3        48.3   $ 294.4        59.7

Unitranche first lien

     218.3        30.1       68.1        13.8  

Unitranche first lien—last out

     16.2        2.2       16.8        3.4  

Senior secured second lien

     58.9        8.1       75.8        15.3  

Unsecured debt

     7.4        1.0       7.2        1.5  

Preferred stock

     4.8        0.7       2.3        0.5  

Common stock and other 3

     69.6        9.6       28.7        5.8  
  

 

 

    

 

 

   

 

 

    

 

 

 

Total investment

   $ 726.5        100.0   $ 493.3        100.0

Fourth Quarter

For the quarter ended December 31, 2019, the Company invested $80.8 million across 7 new portfolio companies and 23 existing portfolio companies. During this period, the Company had $48.7 million in aggregate exits, sales and repayments.

For the quarter ended December 31, 2018, the Company invested $79.1 million across 9 new portfolio companies and 22 existing portfolio companies. During this period, the Company had $29.0 million in aggregate exits, sales and repayments.

Full Year

For the year ended December 31, 2019, the Company invested $378.3 million across 32 new portfolio companies and 41 existing portfolio companies. During this period, the Company had $145.8 million in aggregate exits, sales and repayments.

For the year ended December 31, 2018, the Company invested $291.2 million across 38 new portfolio companies and 31 existing portfolio companies. During this period, the Company had $109.7 million in aggregate exits, sales and repayments.

 

 

2 

Pro forma combined net asset value per share is based on the unaudited pro forma condensed consolidated balance sheet as of December 31, 2019 which assumes the Alcentra Capital Corporation acquisition had been completed as of December 31, 2019. See Form 10-K for further detail and discussion.

3 

Includes investments in CBDC Senior Loan Fund, LLC and GACP II LP.


LOGO

 

Results of Operations

Fourth Quarter

For the quarters ended December 31, 2019 and 2018, investment income totaled $14.7 million and $10.5 million, respectively. The increase was primarily driven by an increase in interest from investments due to an increase in the size of our portfolio.

For the quarters ended December 31, 2019 and 2018, total net expenses, excluding income and excise tax, totaled $6.2 million and $4.4 million, respectively. The increase was primarily driven by higher interest and debt financing costs as the weighted average debt outstanding increased from $219.4 million for the quarter ended December 31, 2018 to $324.3 million for the quarter ended December 31, 2019.

Full Year

For the years ended December 31, 2019 and 2018, investment income totaled $53.5 million and $33.3 million, respectively. The increase was primarily driven by an increase in interest from investments due to an increase in the size of Crescent BDC’s portfolio.

For the years ended December 31, 2019 and 2018, total net expenses, excluding income and excise tax, totaled $21.7 million and $15.4 million, respectively. The increase was primarily driven by higher interest and debt financing costs as the weighted average debt outstanding increased from $182.3 million for the year ended December 31, 2018 to $275.9 million for the year ended December 31, 2019.

Liquidity and Capital Resources

As of December 31, 2019, the Company had $13.4 million in cash and cash equivalents and restricted cash, $44.3 million of uncalled equity commitments and $124.6 million of undrawn capacity on its revolving credit and special purpose vehicle asset facilities, subject to borrowing base and other limitations. The weighted average interest rate of debt outstanding was 4.4% for the year ended December 31, 2019.

The Company’s ending debt to equity leverage ratio was 0.80x as of December 31, 2019.

Conference Call

As previously announced, in light of the January 2020 acquisition of Alcentra Capital Corporation, the Company will not be hosting an earnings conference call to discuss its fourth quarter and full year 2019 results. Upon the release of its first quarter 2020 results, Crescent BDC will host an earnings call to discuss its first quarter of combined results inclusive of the Alcentra Capital Corporation acquisition.

Supplemental Information

An investor presentation of financial information is available on the Investor Relations section of Crescent BDC’s website at www.crescentbdc.com under Events & Presentations.


LOGO

 

About Crescent BDC

Crescent BDC is a business development company that seeks to maximize the total return of its stockholders in the form of current income and capital appreciation by providing capital solutions to middle market companies with sound business fundamentals and strong growth prospects. Crescent BDC utilizes the extensive experience, origination capabilities and disciplined investment process of Crescent Capital Group LP. Crescent BDC is externally managed by Crescent Cap Advisors, a subsidiary of Crescent Capital. Crescent BDC has elected to be regulated as a business development company under the Investment Company Act of 1940. For more information about Crescent BDC, visit www.crescentbdc.com. However, the contents of such website are not and should not be deemed to be incorporated by reference herein.

About Crescent Capital Group

Crescent Capital is a global credit investment manager with approximately $28 billion of assets under management. For over 25 years, the firm has focused on below investment grade credit through strategies that invest in marketable and privately-originated debt securities including senior bank loans, high yield bonds, as well as private senior, unitranche, and junior debt securities. Crescent Capital is headquartered in Los Angeles with offices in New York, Boston, and London and more than 180 employees globally. For more information about Crescent Capital, visit www.crescentcap.com. However, the contents of such website are not and should not be deemed to be incorporated by reference herein.

Contact:

Daniel McMahon

daniel.mcmahon@crescentcap.com

212-364-0149

Forward-Looking Statements

Statements included herein may constitute “forward-looking statements,” which relate to future events or our future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results and conditions may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission. Crescent BDC undertakes no duty to update any forward-looking statements made herein.

Other Information

The information in this press release is summary information only and should be read in conjunction with Crescent BDC’s annual report on Form 10-K for the year ended December 31, 2019, which Crescent BDC filed with the U.S. Securities and Exchange Commission (the SEC) on March 4, 2020, as well as Crescent BDC’s other reports filed with the SEC. A copy of Crescent BDC’s annual report on Form 10-K for the year ended December 31, 2019 and Crescent BDC’s other reports filed with the SEC can be found on Crescent BDC’s website at www.crescentbdc.com and the SEC’s website at www.sec.gov.


Crescent Capital BDC, Inc.

Consolidated Statements of Assets and Liabilities

(Audited)

 

     As of     As of  
     December 31, 2019     December 31, 2018  

Assets

    

Investments, non-controlled and non-affiliated, at fair value (cost of $695,094,640 and $500,680,681, respectively)

   $ 692,089,440     $ 493,341,724  

Investments, controlled, at fair value (cost of $34,000,000 and $0, respectively)

     34,441,720       —    

Cash and cash equivalents

     3,866,854       3,666,607  

Cash denominated in foreign currency (cost of $683,934 and $580,874, respectively)

     709,380       559,011  

Restricted cash

     8,850,793       6,143,205  

Prepaid expenses and other assets

     3,045,834       20,041  

Interest receivable

     2,832,257       1,334,535  

Unrealized appreciation on foreign currency forward contracts

     757,687       17,406  

Deferred tax asset

     420,492       299,474  

Receivable for investments sold

     160,191       37,427  
  

 

 

   

 

 

 

Total assets

   $  747,174,648     $  505,419,430  
  

 

 

   

 

 

 

Liabilities

    

Debt (net of deferred financing costs of $3,431,382 and $1,695,193, respectively)

   $ 322,010,054     $ 235,707,992  

Distributions payable

     8,553,549       5,343,316  

Interest and other debt financing costs payable

     3,545,468       1,849,983  

Accrued expenses and other liabilities

     3,232,864       440,630  

Management fees payable

     1,342,685       963,009  

Deferred tax liability

     879,359       604,402  

Professional fees payable

     379,907       254,929  

Due to Administrator

     174,999       178,461  

Directors’ fees payable

     73,600       62,063  

Unrealized depreciation on foreign currency forward contracts

     65,361       —    

Payable for investments purchased

     —         299,570  

Due to Advisor

     —         136,235  
  

 

 

   

 

 

 

Total liabilities

   $ 340,257,846     $ 245,840,590  
  

 

 

   

 

 

 

Net Assets

    

Preferred stock, par value $0.001 per share (10,000 shares authorized, zero outstanding, respectively)

   $ —       $ —    

Common stock, par value $0.001 per share (200,000,000 shares authorized, 20,862,314 and 13,358,289 shares issued and outstanding, respectively)

     20,862       13,358  

Paid-in capital in excess of par value

     414,293,389       266,023,849  

Accumulated loss

     (7,397,449     (6,458,367
  

 

 

   

 

 

 

Total Net Assets

   $ 406,916,802     $ 259,578,840  
  

 

 

   

 

 

 

Total Liabilities and Net Assets

   $ 747,174,648     $ 505,419,430  
  

 

 

   

 

 

 

Net asset value per share

   $ 19.50     $ 19.43  


Crescent Capital BDC, Inc.

Consolidated Statements of Operations

(Audited)

 

     For the year ended     For the year ended     For the year ended  
     December 31, 2019     December 31, 2018     December 31, 2017  

Investment Income:

      

From non-controlled and non-affiliated investments:

      

Interest income

   $ 47,139,378     $ 31,609,324     $ 21,939,077  

Paid-in-kind interest

     560,349       453,478       64,952  

Dividend income

     2,671,215       590,947       —    

Other income

     805,821       641,375       287,648  

From controlled investments:

      

Dividend income

     2,300,000       —         —    
  

 

 

   

 

 

   

 

 

 

Total investment income

     53,476,763       33,295,124       22,291,677  
  

 

 

   

 

 

   

 

 

 

Expenses:

      

Interest and other debt financing costs

     13,362,283       8,450,514       5,302,910  

Management fees

     9,197,585       5,987,170       4,266,057  

Income incentive fees

     4,752,421       2,742,423       1,622,836  

Other general and administrative expenses

     2,201,283       1,851,252       1,639,006  

Professional fees

     956,930       759,974       713,672  

Directors’ fees

     302,633       290,000       290,000  

Organization expenses

     136,295       154,143       73,015  
  

 

 

   

 

 

   

 

 

 

Total expenses

     30,909,430       20,235,476       13,907,496  

Management fee waiver

     (4,502,149     (2,602,190     (1,548,858

Incentive fee waiver

     (4,752,421     (2,187,445     —    
  

 

 

   

 

 

   

 

 

 

Net expenses

     21,654,860       15,445,841       12,358,638  
  

 

 

   

 

 

   

 

 

 

Net investment income before taxes

     31,821,903       17,849,283       9,933,039  
  

 

 

   

 

 

   

 

 

 

Income and excise taxes

     139,096       121,444       25,474  
  

 

 

   

 

 

   

 

 

 

Net investment income after taxes

     31,682,807       17,727,839       9,907,565  
  

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments:

      

Net realized gain/(loss) on:

      

Non-controlled and non-affiliated investments

     (7,075,600     (466,647     (342,979

Foreign currency transactions

     (70,149     (79,234     (2,739

Net change in unrealized appreciation (depreciation) on:

      

Non-controlled and non-affiliated investments and foreign currency translation

     3,846,085       (8,997,011     (289,512

Controlled investments

     441,720       —         —    

Foreign currency forward contracts

     674,920       17,406       —    
  

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments

     (2,183,024     (9,525,486     (635,230
  

 

 

   

 

 

   

 

 

 

Provision for taxes on realized gain on investments

     (67,321     —         —    

Benefit/(Provision) for taxes on unrealized appreciation (depreciation) on investments

     (153,939     (87,779     (217,149
  

 

 

   

 

 

   

 

 

 

(Provision) benefit for taxes on realized and unrealized gain/loss on investments

     (221,260     (87,779     (217,149
  

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 29,278,523     $ 8,114,574     $ 9,055,186  
  

 

 

   

 

 

   

 

 

 

Per Common Share Data:

      

Net increase in net assets resulting from operations per share (basic and diluted):

   $ 1.69     $ 0.76     $ 1.20  

Net investment income per share (basic and diluted):

   $ 1.83     $ 1.65     $ 1.31  

Weighted average shares outstanding (basic and diluted):

     17,344,640       10,719,485       7,562,447