BlackRock TCP Capital Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 7, 2024

There are 7 speakers on the call.

Operator

Ladies and gentlemen, good afternoon. Welcome everyone to BlackRock TCP Capital Corp. 2nd Quarter 2024 Earnings Conference Call. Today's conference call is being recorded for replay purposes. During the presentation, all participants will be in a listen only mode.

Operator

A question and answer session will follow the company's formal remarks. I will repeat these instructions before we begin the Q and A session. And now, I would like to turn the call over to Mikaela Murray, a member of the BlackRock TCP Capital Corp. Investor Relations team. Mikaela, please proceed.

Speaker 1

Thank you. Before we begin, I'll note that this conference call may contain forward looking statements based on the estimates and assumptions of management at the time of such statements and are not guarantees of future performance. Forward looking statements involve risks and uncertainties, and actual results could differ materially from those projected. Any forward looking statements made on this call are made as of today and are subject to changes out notice. Additionally, certain information discussed and presented may have been derived from third party sources and has not been independently verified.

Speaker 1

Accordingly, we make no representation or warranty with respect to such information. Earlier today, we issued our earnings release for Q2 ended June 30, 2024. We also posted a supplemental earnings presentation to our website at tcpcapital.com. To view the slide presentation, which we will refer to on today's call, please click on the Investor Relations link and select Events and Presentations. These documents should be reviewed in conjunction with the company's Form 10 Q, which was filed with the SEC earlier today.

Speaker 1

I will now turn the call over to our Chairman and CEO, Raj Vig.

Speaker 2

Thanks, Mikaela, and thank you all for joining TCPC's Q2 2024 earnings call. With me today is our President, Bill Tsang our CFO, Eric Cuellar as well as Jason Marig, who was recently appointed as our COO. By way of background, Jason is a key member of our U. S. Direct lending investment team with a long tenure at BlackRock and has been a voting investment committee member of TCPC for some time now.

Speaker 2

Phil and I have worked with Jason for almost 6 years and we look forward to continuing to work with him in his expanded role. Today, after I provide an overview of our Q2 results, Phil will discuss our portfolio and investment activities, and Eric will then review our financial results as well as our capital and liquidity position. We will all be available to answer questions. And before opening the call up to your questions, I will wrap up with some closing comments. I'll start now with the key highlights from the Q2 of 2024.

Speaker 2

We delivered adjusted net investment income of $0.38 per share and our annualized net investment income return on average equity was approximately 14%, which remains at the high end of our historical ranges. Our Board of Directors declared a 3rd quarter dividend of $0.34 per share, which implies dividend coverage of 112% based on our Q2 adjusted NII. The 3rd quarter dividend is payable on September 30 to shareholders of record on September 16. We continue to take a disciplined approach to our dividend with an emphasis on stability and strong coverage from recurring net investment income. As a reminder, throughout TCPC's 12 year history, we have consistently covered our dividends with recurring NII and have also paid several recent special dividends.

Speaker 2

During the Q2, our NAV declined 8.4% and we added 6 portfolio companies to non accrual status, taking non accruals from approximately 1.7% to 4.9% of fair value. While this increase is clearly notable and disappointing, it's important to point out that for the most part the change is due to a set of factors at each individual company level that are wholly unrelated, but coincidentally converged this quarter to drive the non accrual levels. More importantly, these changes do not change our view of the overall strong health of our portfolio. I'd like to take a few minutes now to discuss a number of action items for several of the companies that have actually been in process for some time now and that we believe can drive near term improvements to the limited number of impacted names in the portfolio. The overall majority or roughly 70% of the increase in non accruals is related to just 3 companies, CelleRx, Pluralsight and McAfee, most of which we have discussed in previous quarters.

Speaker 2

We have been working intensely with each of these companies towards a fulsome balance sheet restructuring that we believe can facilitate a path to recovery. The first is CelleRx, which is an Amazon aggregator. Following the combined impact of a stressed balance sheet and a slowdown in online consumer spending, we decided to place CELRx on non accrual status this quarter. We've been actively engaged with company management, the rest of the lender group and CELRx ownership group to effectuate an agreement to address the company's capital structure and liquidity. You may recall that we briefly placed Drazio on non accrual status in Q4, a company that faced a similar set of challenges.

Speaker 2

And as a result of a successful restructuring, the company quickly returned to accrual status in the following quarter Q1 of this year. We remain optimistic that over the medium to longer term, the aggregator space remains attractive and that continued consolidation and cost optimization will result in fewer, larger scale and better capitalized vendors. The second name is Pluralsight, which is held by a number of public BDCs and which many of you have probably heard about in the media or on other earnings calls already. As a reminder, Pluralsight is an enterprise learning platform that designs training software, online courses and video for software developers. The company's premium product growth rate was negatively impacted by a tougher macro environment, which led to tighter IT budgets and layoffs in the tech sector, as well as the higher rate environment which resulted in liquidity pressure for the company.

Speaker 2

While we are not the lead lender nor agent for Pluralsight, we have been closely engaged and aligned with the rest of the lender group to determine the best path forward and are hopeful for a near term resolution of this process. The 3rd notable move is McAfee, a cybersecurity company that's also held by a number of lending groups. That has seen weaker revenue trends and tighter liquidity over the past few quarters and as a result has been evaluating a potential balance sheet restructuring. There are a number of public news articles and public disclosures that suggest the company is evaluating a financing alternative that would ease its near term liquidity challenges. The remaining approximately 1% of change in our accruals is related to another 3 companies that we have also discussed before, lithium, Astra and INH Fire, each of which has experienced idiosyncratic circumstances that have led to credit considerations sufficient for us to reflect the non accrual names this quarter.

Speaker 2

In summary, at the end of June, debt investments in 10 of our 150th portfolio companies or approximately 6% were on non accrual status representing 10.5% of the portfolio at cost and again 4.9% at fair value. Net realized losses for the quarter were $35,000,000 due to the restructuring of our investments in Dorazio, previously mentioned, and Highland. Net unrealized losses were $52,000,000 driven primarily again by CELRx, Pluralsight and Lithium. Despite these challenging names, the overall credit quality of our portfolio remains strong and we are actively monitoring the health of our portfolio companies with respect to their business, end markets, capital structure and the impact of higher rates and inflation on their performance. As of June 30, 2024, our weighted average internal risk rating was 1.5 compared to 1.56 as of March 31, 2024, underscoring that our portfolio companies are performing generally in line or above our base case expectations and the majority of our portfolio companies continue to report revenue and margin expansion.

Speaker 2

For reference, the rating categories are defined in the footnotes of our investor presentation. Before turning the call over to Phil, I would like to share a few additional updates. First, I'd like to congratulate Phil, was recently appointed to TCP's Board of Directors. And as you know, Phil has been an invaluable contributor to our company for many years and is both our President and a member of BlackRock's private debt platform. 2nd, I'm pleased that we were able to capitalize on attractive capital markets conditions to raise $325,000,000 in fixed rate unsecured debt at an attractive rate of 6.95% in May 2024.

Speaker 2

In addition, on August 1, we amended our credit facility extending the maturity date by 3 years and reducing the SOFR rate adjustment on the facility. When we announced TCPC's merger with BlackRock Investment Capital Corp, we noted that one of the benefits of the merger will be approved access to capital and we are pleased to see that it is already happening. We appreciate the support of our bondholders and bankers and are glad to have the dry powder to capitalize on new investment opportunities. Now, I'll turn it over to Phil to discuss our investment activity and portfolio. Phil?

Speaker 3

Thanks, Raj. In the Q2, we invested $130,000,000 $124,000,000 of which was in senior secured loans. We experienced a meaningful pickup in activity across our platform as deployments increased by approximately 40% versus last year, reflecting the return of M and A and refinancing activity. Deployments in the quarter included loans to 5 new and 5 existing portfolio companies and all of our debt investments in the 2nd quarter were 1st lien loans. Investing in incumbent portfolio companies is an important part of our strategy and a competitive advantage that allows us to invest new capital in great businesses in industries that we know well.

Speaker 3

During the Q2, we made a follow on investment in AlphaSense, a growing enterprise SaaS company that provides an artificial intelligence and machine learning search engine to financial services firms, corporations and global consulting firms that want access to market intelligence on competitors, customers and markets. TCPC provided AlphaSense with a first lien term loan in 2022 as a sole lender and we're thrilled to participate in their recent refinancing to support a business that is now twice the size compared to when we made the initial loan in 2022. This is a great example of how we support our borrowers across their lifecycle and how we've earned a strong reputation with management teams for doing so. Another company we invested in during the quarter was SumUp, a leading global payment solutions company focused on empowering small to medium sized merchants with an affordable intuitive payment solution. In 2021, we provided SumUp with a 1st lien term loan to support geographic and product offering expansion plans.

Speaker 3

Since then, SumUp successfully executed strategy. We were pleased to participate in the 2024 refinancing. SumUp was co sourced by our U. S. Direct lending team and BlackRock's Capital Markets business, which speaks to the benefits we realized from being part of the BlackRock platform.

Speaker 3

We believe our channel agnostic approach to deal sourcing allows us to eliminate risks associated with single source channel concentration and to remain selective in choosing the best possible investments from as robust a pipeline at any point in time. The weighted average annual effective yield of our portfolio was 12.4% compared with 13.4% last quarter. We received $185,000,000 in proceeds from the sale or repayment of investments during the quarter. New investments had a weighted average yield of 12.6%, while investments we exited had a yield of 14.2%, which explains some of the yield compression we experienced this quarter. We remain disciplined with our underwriting standards in an environment where spreads tightened.

Speaker 3

In several instances, we chose not to refinance or reprice existing loans at lower yields or without covenants when the perceived risk simply did not match our potential return targets. At quarter end, our portfolio was comprised of investments in 158 companies with a total fair market value of approximately $2,000,000,000 and an average investment size of $12,500,000 91% of our portfolio was invested in senior secured loans, 81% of which were in 1st lien loans, 93% of our debt investments were in floating rate loans, And recurring income was distributed broadly across our diverse portfolio with more than 75% of our portfolio companies each contributing less than 1% of the total. Now I'll turn it over to Eric to walk through our financial results and our capital and liquidity position.

Speaker 2

Thank you, Phil. As Raj noted, our net investment income for the quarter was $0.38 per share on an adjusted basis. As detailed in our earnings press release, adjusted NII excludes amortization of the purchase accounting discount resulting from the merger with BCIC and is calculated in accordance with GAAP. A full reconciliation of adjusted NII to GAAP NII as well as other non GAAP financial metrics is included in our earnings press release and 10 Q. Gross investment income for the 2nd quarter was $0.84 per share.

Speaker 2

This included recurring cash interest of $0.67 per share, non recurring interest of 0 point 0 $7 recurring discount and fee amortization of $0.04 and PIK income of $0.03 PIK income remains in line with the average over our history. Investment income also included $0.03 of dividend income. Operating expenses for the Q2 were $0.42 per share, including $0.23 of interest and other debt expenses, reflecting higher interest rates and debt expenses from the merger with BCIC and the issuance of our 20 29 notes during the quarter. Incentive fees for the quarter totaled $6,800,000 or $0.08 per share. Net realized losses for the quarter were $35,500,000 or $0.41 per share.

Speaker 2

Net unrealized losses totaled $52,000,000 or $0.60 per share, primarily reflecting unrealized markdowns on the investments Raj discussed earlier. The adjusted net decrease in assets for the quarter was $51,300,000 or $0.60 per share. At the end of the Q2, our available liquidity was $780,000,000 which includes $585,000,000 in available capacity under our leverage program and $195,000,000 of cash and cash equivalents. Unfunded loan commitments to portfolio companies were only 5% of total investments or approximately $93,000,000 of which only $58,000,000 were revolver commitments. Net leverage at the end of the quarter was 1.13 times, which is well within our target range of 0.9 times to 1.20 times.

Speaker 2

Our diverse and flexible leverage program includes 3 low cost credit facilities, 4 unsecured note issuances and an SBA program. And the weighted average interest rate on debt outstanding at the end of the quarter was 5.0%. Now, I'll turn the call back over to Raj. Thanks, Eric. Before taking your questions, I will wrap up with some closing comments.

Speaker 2

Although the private credit market and our business are showing many healthy signs, we did experience higher non accruals this quarter. Over our 20 plus year history, we've been through some challenging times and we are taking the same approach we have always as it has proven effective. That approach is to maintain a deep understanding of the business and its long term prospects and to work collaboratively with our borrowers, other lenders applicable and business owners to constructively resolve business and credit issues. Resolving issues quickly is a priority, but we are also equally focused on achieving the best possible outcome for our investors. As headed to the second half of twenty twenty four, we have a strong capital position and a robust pipeline of opportunities.

Speaker 2

We are taking a highly selective and disciplined approach to deploying capital with a credit first downside protected mindset. We remain focused on the core middle market where there is less competition, more covenant protection and attractive pricing. We continue to invest in great companies that have the business models and management teams to operate successfully in the current environment. We continue to pass on transactions that do not meet our underwriting standards, leveraging our experience in special situations lending to structure deals with strong financial covenants and lender friendly deal structures. As Phil mentioned, we are also supporting many existing portfolio companies with follow on financing.

Speaker 2

We remain committed to maintaining our well covered dividend and to delivering attractive returns to our shareholders and look forward to keeping you updated on our progress. And with that, operator, please open the call for questions.

Operator

Thank you. We will now begin the question and answer Nolan with Ladenburg Thalmann. You may proceed.

Speaker 4

Hey, guys. Okay, I got a number of questions here. How much did the increase in non accruals affect EPS in the quarter?

Speaker 2

Yes. Good question, Chris. It was roughly $0.08 per share. That's the increase in the quarter. And I'll just note, we did take all of them on accrual assets at the beginning of the quarter.

Speaker 2

So that was a full quarter impact.

Speaker 4

Okay. And I guess, that should be sort of a runway, assuming that these take a few quarters to resolve. Is that a fair assumption?

Speaker 2

Yes, it's still ongoing currently, but it would be incremental to what we reported in the quarter. The quarter already reflected no income on these things.

Speaker 4

Okay. And then I know that BCIC and TCPC had overlapping investments, but were these given that you just exited or just completed a merger, how much of these were legacy TCPC and how much were from the merger?

Speaker 2

Well, keep in mind at the time of the merger, the portfolios were pretty much overlapping except for a few legacy BCIC positions, for the most part related to the Gordon Brothers entity. So I wouldn't necessarily call them legacy TCPC or legacy BCIC. Both portfolios were active and converged over time since GCPC's acquisition over 6 years ago. It's not really a distinction given that we invest across the variety of funds we manage.

Speaker 4

Okay. Leverage. Leverage is now an issue for you guys. Your debt to equity ratio according to my estimate is 1.34. What sort of range are you targeting?

Speaker 4

What's the upper limit?

Speaker 2

Yes. And I'm assuming that 1.34 that you mentioned is not net of cash. Yes. So our regulatory net leverage is 1.13 times. That is net of cash.

Speaker 2

We actually were holding off to about $194,000,000 of cash at the end of the quarter, which will be primarily used to repay our 2024 notes, which are due in about a week from now. So we purposely had not prepaid them as we're actually earning more in cash than the rate on those notes are coming due next week.

Speaker 5

Yes.

Speaker 2

I guess I would push back on that, Chris. I don't think leverage is an issue. I think there's a couple of moving items that may you look at it all in net net, it's actually pretty much in the range what we've been doing historically, maybe even a little lower.

Speaker 4

Yes, net of cash, that's a fair point. Last point is, you guys seem to accelerate investments in the quarter and you just completed a merger as the non accruals increase. It seemed like you had a lot of stuff going on in the quarter. And why was it this quarter that you suddenly decide to step on the gas for more investments?

Speaker 2

Yes. Maybe I'll ask Phil to cover the investment side. The I mean, look, since the one outlier quarter is absolutely the non accruals. I think time will tell maybe in the very near term whether that really is a spike or is convergence of events that kind of come in and come out. But I guess I'd turn over to Phil on the investments.

Speaker 2

I wouldn't characterize it as accelerating. It's pretty normal deployment.

Speaker 3

Yes. Chris, it's Phil. Yes, we don't really view it as having accelerated our deployment. I think maybe what you're seeing is a number of companies that were in our portfolio had grown and actually refinanced the existing loans. I mentioned some up in Altusense in the script earlier, largely because those are ones that we actually upsized our investments in as they grew in size.

Speaker 3

So if our existing portfolio companies are looking for expanded financing opportunities to support their growth and they've shown great evidence of execution and supportive equity value there underneath the debt, then we're very happy to continue investing new dollars to support their growth. And I think that's what we

Speaker 2

saw last quarter.

Speaker 4

Great. Thank you.

Speaker 2

Thank you, Chris.

Operator

The next question is from the line of Robert Dodd with Raymond James. You may proceed.

Speaker 6

Hi, guys. A question about like overall portfolio construction. I mean, it looks like over the last little while, there's been more concentration by industry than by portfolio name, right? I mean, the Amazon aggregator space, it's a niche. You have 150 plus different companies, but 4 of them were in the same niche and 3 of those 4 ended up with a major restructuring or another core.

Speaker 6

Are there other pockets within the portfolio where you might have multiple portfolio names, but they're operating in the same niche? So is there more industry concentration than it looks like there is when we look at name concentration? Let

Speaker 2

me kind of address it in

Speaker 6

a couple of ways. The aggregator space,

Speaker 2

let me kind of address it in a couple of ways. The aggregator space absolutely is correlated. And I think for several quarters now, maybe more, we've been talking about it. It's just a matter of time between the ones that have pulled the trigger, so to speak, on restructuring, in many cases, which we are pushing. And last quarter, in Q4, Q1, you saw BRAZIO come in and out.

Speaker 2

This quarter, you saw CELLRx. Ultimately, they are, I think, going to continue some view around consolidation, scale benefits, etcetera. Again, we've been talking about those themes kind of as a one off in this space for some time now. Beyond that, we do not see any correlation along the lines that you're talking about. We have had a weighting to industries that we like.

Speaker 2

I think that generally has worked out very well for us in very defensive names. And keep in mind, in some of these industries like software or healthcare or financial services, there are many, many subcategories that really don't correlate even though they may be under one kind of holding industry grouping. So we do not see that. The only other thing I would say and again we've talked about in the past is there's some risk in healthcare around regulatory reimbursement, but for the most part we've navigated that I think well. But the aggregated space in and of itself is unique.

Speaker 2

So thus far we don't see a trend line like in the portfolio.

Speaker 6

I appreciate that. I mean, that's, I guess, the question. I mean, is it is there anything that's been done in how deals are value added, how they're onboarded in future to avoid any risk of these kind of correlated industry, but not same name concentrations? I mean, has anything changed in procedures to avoid

Speaker 2

this kind of situation out there? I think so, look, I think it's a double edged sword. In many ways, the ability to invest within an industry and the knowledge that comes from that approach has actually net net been a very big positive. Being able to assess competitors, being able to talk to industry executives and really do a deep dive has allowed us I think to invest well by industry. I think the case of the aggregators that might have been it wasn't necessarily a risk approach.

Speaker 2

In fact, we've avoided a lot of worse outcomes in the aggregator space. I think what we had was a whipsaw effect coming out of COVID with the balance sheet and inventory over purchasing and then consumer spending decline that just hit those companies and it was a little bit of a bad forecasting on trends that actually long term will be positive. So net net, the industry approach has been a great way for us to invest knowledgeably and choose the best companies. I think in this one case thus far, it has been a detriment, but the show isn't over. And I would say, like all restructurings, until the money is back and the cash is in, You don't know what it looks like, but our history of getting very strong recovery on names that have volatility until on an unrealized basis, I would highlight that record as being very positive and effective.

Speaker 2

And time will tell here and the story isn't over.

Speaker 6

I agree. But you do have a good track record on that front. So that's the follow-up next question. Of the non accruals or more broadly stressed assets you have right now, how many or what percentage are you in the driver's seat of the restructuring? Obviously, that's not the case with Clorox, for example, and probably not McAfee, right?

Speaker 6

So on that front, I mean, how many are you driving the car so to speak to get that restructuring outcome?

Speaker 2

I would say in most of them we are pretty meaningfully involved and I would include that. Obviously, Pluralsight is a longer list of folks, very qualified folks that we are working with. But if you take the argument that in every quarter, which we talk about, most of our deals are either sold led or small club, then by proxy, the negotiations and the process for a portfolio that's built that way will have us being the sole or very influential voice on the restructuring. And that's by design. That's not a coincidence.

Speaker 2

We want to be involved and meaningfully involved because I think we have a DNA which more often than not results in a better than average outcome.

Speaker 6

Yes, got it. Understood. Then just more broadly, if I can, on I have a liquidity in the portfolio, not distressed names. Are you seeing any changes in sponsor willingness to support? Obviously, it's called parallel to qualify where the sponsor is not supporting.

Speaker 6

But are you seeing any incremental changes in how sponsors are willing to discuss what they're asking for or whether they're continuing where necessary, it's always fair to put capital in. Is anything changing on that point?

Speaker 3

Robert, it's Phil. I would say we're not really seeing a real change in sponsors' interest in supporting and not supporting their companies. I think it's very much a case by case basis. As you can imagine, they're making rational decisions around the valuation of the businesses where they're putting up new money, whether it's equity or some kind of subordinate piece of paper, and also the return on that new money. So I think it's very much a case by case basis depending on how the company is performing, how levered the business is, and how long it will take to turn it around given the accretion and if the company is going through a tough amendment, maybe it's there's a lot of pick, which keeps accreting, pushing down the value of the equity and so on.

Speaker 3

So I think it's very much a case by case basis. We are still seeing a number of sponsors putting in more money either to defend their ownership or to go on offense to support their companies, to make an acquisition, or to keep growing the business. And that's across various industries. So I would say, generally speaking, I can't put a broad theme on sponsor behavior, but they're very much rational actors as are we.

Speaker 6

Got it. Thank

Speaker 2

you. Thank you.

Operator

The next question is from the line of Paul Johnson with KBW. You may proceed.

Speaker 5

Hey, good afternoon. Thanks for taking my questions. Just a few following up on Robert's question. First on leverage, it would seem that the gross kind of 1 point 5 debt to equity, 1.3 sort of net leverage does seem a little high, possibly not outside of your target range,

Speaker 6

but it does seem like it might be, at least on

Speaker 5

the margins, a limiter of potential growth going forward. So just kind of want to get your thoughts on how you're managing around that as well as keeping in mind the investment grade rating. I'm sure there's some kind of leverage you would like to maintain. And I understand Fitch recently up rated the rating outlook there as well. So that's positive.

Speaker 5

But mainly just kind of the management around current leverage levels would be helpful.

Speaker 2

Yes. Good question, Paul. And the 1.1 the 1.3 leverage that you mentioned, it's very much temporary and very short term. We view it as net of cash because next week when we use that cash to pay down debt, you will see our debt our leverage go down over about 25 points. So we view it as 1.13@quarterend on a net basis.

Speaker 2

And it is within our range between 0.9 to 1.2. But certainly leverage is something that we watch on a daily basis, but we're comfortable with where it's at.

Speaker 5

Got it. And then in terms of new investments, I mean, I think you talked about this a little bit in Todd's questions, but I mean, has there been a shift to potentially smaller investment sizes just kind of given the leverage constraint and continued focus on just diversification or how should we think about that?

Speaker 2

Yes. I think you should think about it as being pretty consistent. We've always taken an approach of keeping a very diversified portfolio, call it a 1%, maybe 1.5%, give or take physician size. So we will continue that approach. I think that given the size of the assets growing post merger, the dollar amount may pick up, but you're not going to see the concentration pick up.

Speaker 2

The other thing is we absolutely will stay focused on being within the range of the guidance of the rating agencies. But there's a lot of room, in my opinion, between the 1.13 and where that is and historical levels. The other thing I would highlight is with a pickup in the market, both the BSL market and some of the activity in our market, we have seen a little bit of pickup in refinancings. And keep in mind, those refinancings bring cash in oftentimes with a bit of a prepayment and the unamortized OID being picked up. And that's obviously a good source of capital without growing the leverage to redeploy and to put back in the market.

Speaker 2

Some of that you already saw in this quarter based on the earlier question that Phil answered about deployment side, we're just getting money back. And when we do that, that allows for us to meet the demand of our borrowers within the fund that the public fund.

Speaker 5

Got it. Thanks for that. And then last question for me was just on the advisor support for the dividend. Can you remind me, is it how long does the advisor commit their support for the dividend? And I was also curious, I believe it's a $0.32 level that the advisor has agreed to waive fees if earnings falls below that level.

Speaker 5

What's the reason for $0.32 versus just the $0.34 current dividend? What's the difference there?

Speaker 2

Sure. Yes. Thanks for the question, Paul. Yes, The investment manager support is for 4 quarters after the date of the close of the merger. So there's still 2 more quarters left in that support.

Speaker 2

The and it covers anything below $0.32 of NII. The $0.32 was the dividend rate that TCPC was paying at the time that the merger was agreed to. And we have since then we took up the dividend from that point, but that's how the $0.32 was derived. Yes. And keep in mind this last quarter, the coverage was 112%.

Speaker 2

So it's kind of a moot point. It was really done as a shareholder protection, but we don't anticipate certainly with the cover zones we have even post the non accruals of being at that threshold.

Speaker 5

Got it. That's helpful. And then just to be clear, it's 2 more quarters. So the dividends will run through the end of this year?

Speaker 2

Correct. That's correct.

Speaker 3

Yes.

Speaker 5

Okay. Thank you. That's all for me.

Speaker 2

Thank you.

Operator

There are currently no questions registered. There are no additional questions waiting at this time. I would like to pass the conference over to the management team for any closing remarks.

Speaker 2

Thank you all for your participation on today's call. I would like to thank our shareholders and capital partners for their continued support and our team for all their hard work and dedication. Thanks for joining us. This concludes today's call.

Operator

That concludes the BlackRock TCP Capital Corp. 2nd quarter 2024 earnings call. Thank you for your participation and enjoy the rest of your day.

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BlackRock TCP Capital Q2 2024
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