Form 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): August 10, 2020 (August 7, 2020)

 

 

Crescent Capital BDC, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   814-01132   47-3162282

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Commission

File Number)

 

(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 August 10, 2020, the Registrant issued a press release announcing its financial results for the quarter ended June 30, 2020 and a dividend of $0.41 per share payable on October 15, 2020 to stockholders of record at the close of business on September 30, 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 August 10, 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: August 10, 2020     By:   /s/ Gerhard Lombard
    Name:   Gerhard Lombard
    Title:   Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

Crescent Capital BDC, Inc. Reports Second Quarter 2020 Financial Results;

Declares a Third Quarter 2020 Regular Dividend of $0.41 per Share

LOS ANGELES, August 10, 2020 — Crescent Capital BDC, Inc. (“Crescent BDC” or “Company”) (NASDAQ: CCAP) today reported net investment income of $13.0 million, or $0.46 per share, and a net increase in net assets resulting from operations of $56.4 million, or $2.00 per share, for the second quarter ended June 30, 2020. Reported net asset value per share was $18.12 at June 30, 2020 as compared to $16.52 at March 31, 2020.

The increase in net asset value for the second quarter was primarily driven by unrealized gains from the impact of credit spreads tightening relative to the end of the first quarter.

Declaration of Regular Dividend for Third Quarter 2020

The Company announced that its Board of Directors has declared a third quarter 2020 dividend of $0.41 per share, which will be paid on or around October 15, 2020 to stockholders of record as of the close of business on September 30, 2020.

Selected Financial Highlights

($ in millions, except per share amounts. Unaudited.)

 

     As of  
     June 30, 2020     March 31, 2020     June 30, 2019  

Investments, at fair value

   $ 895.2     $ 883.2     $ 624.9  

Total assets

   $ 926.3     $ 909.9     $ 637.2  

Total net assets

   $ 510.3     $ 465.8     $ 320.8  

Net asset value per share

   $ 18.12     $ 16.52     $ 19.75  

Weighted average yield on income producing securities (at cost)1

     7.9     7.9     8.4

Percentage of debt investments at floating rates

     96.9     96.0     96.1

 

  (1)

Yield excludes investments on non-accrual status.

 

     Three Months Ended  
     June 30, 2020      March 31, 2020  
     Total
Amount
     Per
Share
     Total
Amount
     Per
Share
 

Total investment income

   $ 19.3      $ 0.69      $ 18.8      $ 0.72  

Net investment income

   $ 13.0      $ 0.46      $ 11.6      $ 0.44  

Net realized gains (losses)

   $ (1.1    $ (0.04    $ (0.1    $ (0.00

Net unrealized gains (losses), net of taxes

   $ 44.5      $ 1.59      $ (82.2    $ (3.14

Realized loss on asset acquisition

     n/a        n/a      $ (3.8    $ (0.14

Net increase (decrease) in net assets resulting from operations

   $ 56.4      $ 2.00      $ (74.5    $ (2.84

Dividend distributions per share

      $ 0.41         $ 0.41  

Portfolio & Investing Activity

As of June 30, 2020 and March 31, 2020, the Company had investments in 124 and 127 portfolio companies with an aggregate fair value of $895.2 million and $883.2 million, respectively. The portfolio at fair value was comprised of the following asset types:


     As of  
$ in millions    June 30, 2020     March 31, 2020  

Investment Type

   Fair Value      Percentage     Fair Value      Percentage  

Senior secured first lien

   $ 361.7        40.4   $ 387.2        43.8

Unitranche first lien

     307.2        34.3     294.2        33.3

Unitranche first lien—last out

     14.4        1.6     14.6        1.6

Senior secured second lien

     106.7        11.9     102.9        11.7

Unsecured debt

     8.7        1.0     8.6        1.0

Equity & other

     45.0        5.0     31.8        3.6

LLC/LP equity interests

     51.5        5.8     43.9        5.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Total investments

   $ 895.2        100.0   $ 883.2        100.0

For the three months ended June 30, 2020, the Company invested $26.4 million into one new portfolio company, one refinancing and several follow-on revolver and delayed draw fundings. For this period, the Company had $60.4 million in aggregate exits, sales and repayments.

For the three months ended March 31, 2020, excluding assets acquired in the Alcentra Capital Corp. (“Alcentra”) acquisition, the Company invested $117.4 million across seven new portfolio companies and three existing portfolio companies. For this period, the Company had $73.8 million in aggregate exits, sales and repayments.

Results of Operations for the Three Months Ended June 30, 2020

Investment income increased to $19.3 million for the three months ended June 30, 2020 from $18.8 million for the three months ended March 31, 2020. The increase was due in part to three months of investment income from Alcentra portfolio investments that the Company acquired on January 31, 2020.

Total net expenses, including income and excise taxes, decreased to $6.4 million for the three months ended June 30, 2020 from $7.3 million for the three months ended March 31, 2020. The decrease was primarily due to lower interest and other debt financing costs as the weighted average interest rate on the Company’s weighted average outstanding debt decreased from 4.0% for the three months ended March 31, 2020 to 3.0% for the three months ended June 30, 2020.

Liquidity and Capital Resources

As of June 30, 2020, the Company had $11.6 million in cash and cash equivalents and restricted cash and $166.1 million of undrawn capacity on its credit facilities, subject to borrowing base and other limitations. The weighted average interest rate on the Company’s debt outstanding was 2.7% as of June 30, 2020.

The Company’s debt to equity ratio was 0.78x as of June 30, 2020.

On July 30, 2020, the Company announced that it agreed to issue $50.0 million aggregate principal amount of 5.95% senior unsecured notes due July 30, 2023. Pro forma for this transaction, the Company had over $200 million of available liquidity as of June 30, 2020.

Conference Call

The Company will host a webcast/conference call on Tuesday, August 11, 2020 at 12:00 p.m. (Eastern Time) to discuss its quarter ended June 30, 2020 financial results. Please visit Crescent BDC’s webcast link located on the Events & Presentations page of the Investor Relations section of Crescent BDC’s website for a slide presentation that complements the earnings conference call.


All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Events & Presentations page of the Investor Resources section of Crescent BDC’s website at www.crescentbdc.com. Please visit the website to test your connection before the webcast. Participants are also invited to access the conference call by dialing one of the following numbers:

Domestic: (855) 982-6679

International: (614) 999-9468

Conference ID: 8443979

All callers will need to enter the Conference ID followed by the # sign and reference “Crescent BDC” once connected with the operator. An archived replay will be available via a webcast link located on the Investor Relations section of Crescent BDC’s website.

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 Capital”). Crescent BDC is externally managed by Crescent Cap Advisors, LLC, 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

This press release, and other statements that Crescent BDC may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to Crescent BDC’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.

Crescent BDC cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which may change over time. Forward-looking statements speak only as of the date they are made, and Crescent BDC 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 Crescent BDC’s 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) our future operating results; (2) our business prospects and the prospects of our portfolio companies; (3) the impact of investments that we expect to make; (4) our contractual arrangements and relationships with third parties; (5) the dependence of our future success on the general economy and its impact on the industries in which we invest; (6) the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives; (7) our expected financings and investments; (8) the adequacy of our cash resources and working capital, including our ability to obtain continued financing on favorable terms; (9) the timing of cash flows, if any, from the operations of our portfolio companies; (10) the impact of increased competition; (11) the ability of our investment advisor to locate suitable investments for us and to monitor and administer our investments; (12) potential conflicts of interest in the allocation of opportunities between us and other investment funds managed by our investment advisor or its affiliates; (13) the ability of our investment advisor to attract and retain highly talented professionals; (14) changes in law and policy accompanying the new administration and uncertainty pending any such changes; (15) increased geopolitical unrest, terrorist attacks or acts of war, which may adversely affect the general economy, domestic and local financial and capital markets, or the specific industries of our portfolio companies; (16) changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets; (17) the unfavorable resolution of legal proceedings; and (18) the impact of changes to tax legislation and, generally, our tax position.

Crescent BDC’s Annual Report on Form 10-K for the year ended December 31, 2019 and quarterly report on Form 10-Q for the quarter ended June 30, 2020, each filed with the SEC, identify additional factors that can affect forward-looking statements.

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, Crescent BDC’s quarterly report on Form 10-Q for the quarter ended June 30, 2020, which Crescent BDC filed with the SEC on August 10, 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, Crescent BDC’s quarterly report on Form 10-Q for the quarter ended June 30, 2020 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

(in thousands except share and per share data)

 

     As of
June 30, 2020
(Unaudited)
    As of
December 31,
2019
 

Assets

    

Investments, at fair value

    

Non-controlled non-affiliated (cost of $864,843 and $675,329, respectively)

   $ 821,831     $ 671,582  

Non-controlled affiliated (cost of $33,782 and $19,766, respectively)

     42,890       20,507  

Controlled (cost of $39,000 and $34,000, respectively)

     30,513       34,442  

Cash and cash equivalents

     3,514       4,576  

Restricted cash and cash equivalents

     8,043       8,851  

Receivable for investments sold

     11,393       160  

Interest receivable

     3,980       2,832  

Unrealized appreciation on foreign currency forward contracts

     2,672       758  

Deferred tax assets

     762       421  

Other assets

     712       3,046  
  

 

 

   

 

 

 

Total assets

   $ 926,310     $ 747,175  
  

 

 

   

 

 

 

Liabilities

    

Debt (net of deferred financing costs of $4,504 and $3,431, respectively)

   $ 395,829     $ 322,010  

Distributions payable

     11,548       8,554  

Interest and other debt financing costs payable

     3,345       3,545  

Accrued expenses and other liabilities

     2,553       3,788  

Management fees payable

     1,660       1,343  

Deferred tax liabilities

     959       879  

Directors’ fees payable

     110       74  

Unrealized depreciation on foreign currency forward contracts

     8       65  
  

 

 

   

 

 

 

Total liabilities

   $ 416,012     $ 340,258  
  

 

 

   

 

 

 

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, 28,167,360 and 20,862,314 shares issued and outstanding, respectively)

  

 

28

 

 

 

21

 

Paid-in capital in excess of par value

     558,913       414,293  

Accumulated loss

     (48,643     (7,397
  

 

 

   

 

 

 

Total Net Assets

   $ 510,298     $ 406,917  
  

 

 

   

 

 

 

Total Liabilities and Net Assets

   $ 926,310     $ 747,175  
  

 

 

   

 

 

 

Net asset value per share

   $ 18.12     $ 19.50  


Crescent Capital BDC, Inc.

Consolidated Statements of Operations

( in thousands except share and per share data)

(Unaudited)

 

    For the three months ended     For the six months ended  
    June 30,     June 30,  
    2020     2019     2020     2019  

Investment Income:

       

From non-controlled non-affiliated investments:

       

Interest income

  $  15,689     $  10,523     $  32,292     $  20,875  

Paid-in-kind interest

    697       172       1,246       337  

Dividend income

    712       508       1,604       931  

Other income

    620       500       1,060       744  

From non-controlled affiliated investments:

       

Interest income

    328       265       671       537  

Paid-in-kind interest

    481       —         485       —    

From controlled investments:

       

Dividend income

    800       550       800       550  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    19,327       12,518       38,158       23,974  
 

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

       

Interest and other debt financing costs

    3,631       3,173       7,980       5,982  

Management fees

    2,767       2,160       5,418       4,050  

Incentive fees

    2,267       1,107       4,199       2,131  

Professional fees

    364       192       706       384  

Directors’ fees

    110       72       239       145  

Organization expenses

    —         49       —         91  

Other general and administrative expenses

    495       537       1,221       1,058  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    9,634       7,290       19,763       13,841  

Management fee waiver

    (1,107     (1,044     (2,264     (1,947

Incentive fee waiver

    (2,267     (1,107     (4,199     (2,131
 

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

    6,260       5,139       13,300       9,763  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income before taxes

    13,067       7,379       24,858       14,211  

Income and excise taxes

    111       3       349       6  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

    12,956       7,376       24,509       14,205  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments:

       

Net realized gain/(loss) on:

       

Non-controlled non-affiliated investments

    (1,136     (660     (1,023     (921

Foreign currency transactions

    76       476       (161     489  

Net change in unrealized appreciation (depreciation) on:

       

Non-controlled non-affiliated investments and foreign currency translation

    25,140       1,434       (39,300     3,894  

Non-controlled affiliated investments

    11,878       80       8,367       616  

Controlled investments

    7,914       (472     (8,929     (713

Foreign currency forward contracts

    (218     309       1,972       282  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments

    43,654       1,167       (39,074     3,647  
 

 

 

   

 

 

   

 

 

   

 

 

 

Realized loss on asset acquisition

    —         —         (3,825     —    
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses) on investments and asset acquisition

    43,654       1,167       (42,899     3,647  

Benefit (provision) for taxes on unrealized appreciation (depreciation) on investments

    (193     (31     262       (480
 

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

  $ 56,417       8,512     $ (18,128     17,372  
 

 

 

   

 

 

   

 

 

   

 

 

 

Per Common Share Data:

       

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

  $ 2.00       0.54     $ (0.67     1.15  

Net investment income per share (basic and diluted):

  $ 0.46       0.47     $ 0.90       0.94  

Weighted average shares outstanding (basic and diluted):

    28,168,643       15,703,473       27,190,817       15,087,362