Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A
(Amendment No. 1)

 CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2019

TCG BDC, INC.
(Exact name of registrant as specified in charter)

Maryland
 
814-00995
 
80-0789789
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
520 Madison Avenue, 40th Floor, New York, New York
 
10022
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (212) 813-4900 

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 (see General Instruction A.2 below):
 
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))

 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.  ☐





Explanatory Note
This Amendment No. 1 on Form 8-K/A (“Amendment No. 1”) amends TCG BDC, Inc.’s (the “Company”) Current Report on Form 8-K dated May 7, 2019, as filed with the U.S. Securities and Exchange Commission on May 7, 2019 (the “Original Filing” and the “Original Filing Date”).

This Amendment No. 1 is being filed solely to correct the time of the conference call to 8:30 a.m. EDT on Wednesday, May 8, 2019 to discuss these quarterly financial results. The call and webcast will be available on the TCG BDC website at tcgbdc.com. The call may be accessed by dialing +1 (866) 394-4623 (U.S.) or +1 (409) 350-3158 (international) and referencing “TCG BDC Financial Results Call.” The conference call will be webcast simultaneously via a link on TCG BDC’s website and an archived replay of the webcast also will be available on the website soon after the live call for 21 days.

Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, we have included the entire text of Exhibit 99.1 under Item 9.01 in this Amendment No. 1.

Except as noted above, no changes were made to the Original Filing. This amendment speaks as of the Original Filing Date, and does not reflect events that may have occurred subsequent to the Original Filing Date.





Item 9.01 – Financial Statements and Exhibits.
 
Exhibit 99.1 shall be deemed furnished herewith.

(d)
Exhibits:
Exhibit Number
  
Description
 
 
  






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
TCG BDC, INC.
 
 
 
 
(Registrant)
 
 
 
 
 
Dated: May 8, 2019
 
By:
 
/s/ Venugopal Rathi
 
 
 
 
Name: Venugopal Rathi
 
 
 
 
Title: Treasurer



Exhibit


Exhibit 99.1


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12888482&doc=3

For Immediate Release
May 7, 2019

TCG BDC, Inc. Announces First Quarter 2019 Financial Results and Declares Second Quarter 2019 Dividend of $0.37 Per Share

New York - TCG BDC, Inc. (together with its consolidated subsidiaries, “we,” “us,” “our,” “TCG BDC” or the “Company”) (NASDAQ: CGBD) today announced its financial results for its first quarter ended March 31, 2019.

Selected Financial Highlights
(dollar amounts in thousands, except per share data)
March 31, 2019
 
December 31, 2018
Total investments, at fair value
$
2,155,209

 
$
1,972,157

Total assets
2,214,279

 
2,084,743

Total debt
1,107,064

 
960,678

Total net assets
$
1,060,187

 
$
1,063,218

Net assets per share
$
17.30

 
$
17.09

 
 
For the three month periods ended
 
 
March 31, 2019
 
December 31, 2018
Total investment income
 
$
55,187

 
$
56,311

Net investment income (loss)
 
27,562

 
29,411

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments
 
6,164

 
(30,571
)
Net increase (decrease) in net assets resulting from operations
 
$
33,726

 
$
(1,160
)
 
 
 
 
 
Basic and diluted per weighted-average common share:
 
 
 
 
Net investment income (loss)
 
$
0.45

 
$
0.47

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments
 
0.10

 
(0.49
)
Net increase (decrease) in net assets resulting from operations
 
$
0.55

 
$
(0.02
)
Weighted-average shares of common stock outstanding—Basic and Diluted
 
61,772,774

 
62,496,338

Dividends declared per common share
 
$
0.37

 
$
0.57


First Quarter 2019 Highlights
(dollar amounts in thousands, except per share data)

Net investment income for the three month period ended March 31, 2019 was $27,562, or $0.45 per share, as compared to $29,411, or $0.47 per share, for the three month period ended December 31, 2018;
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments for the three month period ended March 31, 2019 was $6,164, or $0.10 per share, primarily driven by a decrease in market yields, as compared to $(30,571), or $(0.49) per share, for the three month period ended December 31, 2018;
Net increase (decrease) in net assets resulting from operations for the three month period ended March 31, 2019 was $33,726, or $0.55 per share, as compared to $(1,160), or $(0.02) per share, for the three month period ended December 31, 2018;

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During the three month period ended March 31, 2019, the Company repurchased 958,182 shares of the Company's common stock pursuant to the Company’s $100 million stock repurchase program at an average cost of $14.70 per share, or $14.1 million in the aggregate, resulting in accretion to net assets per share of $0.04; and
On May 6, 2019, our Board of Directors declared a quarterly dividend of $0.37 per share, which is payable on July 17, 2019 to stockholders of record as of June 28, 2019.

Portfolio and Investment Activity
(dollar amounts in thousands, except per share data, unless otherwise noted)

As of March 31, 2019, the fair value of our investments was approximately $2,155,209, comprised of 131 investments in 103 portfolio companies/investment fund across 29 industries with 59 sponsors. This compares to the Company’s portfolio as of December 31, 2018, as of which date the fair value of our investments was approximately $1,972,157, comprised of 119 investments in 96 portfolio companies/investment fund across 27 industries with 57 sponsors.
As of March 31, 2019 and December 31, 2018, investments consisted of the following:
 
March 31, 2019
 
December 31, 2018
 Type—% of Fair Value
Fair Value
 
% of Fair Value
 
Fair Value
 
% of Fair Value
First Lien Debt (excluding First Lien/Last Out)
$
1,462,000

 
67.84
%
 
$
1,343,422

 
68.12
%
First Lien/Last Out Unitranche
201,301

 
9.34

 
202,849

 
10.29

Second Lien Debt
228,851

 
10.62

 
178,958

 
9.07

Equity Investments
28,466

 
1.32

 
24,633

 
1.25

Investment Fund
234,591

 
10.88

 
222,295

 
11.27

Total
$
2,155,209

 
100.00
%
 
$
1,972,157

 
100.00
%

The following table shows our investment activity for the three month period ended March 31, 2019:
 
Funded
 
Sold/Repaid
Principal amount of investments:
Amount
 
% of Total
 
Amount
 
% of Total
First Lien Debt (excluding First Lien/Last Out)
$
143,749

 
57.57
%
 
$
(25,902
)
 
37.07
%
First Lien/Last Out Unitranche
23,879

 
9.56

 
(25,264
)
 
36.16

Second Lien Debt
49,344

 
19.76

 

 

Equity Investments
2,241

 
0.90

 

 

Investment Fund
30,500

 
12.21

 
(18,700
)
 
26.77

Total
$
249,713

 
100.00
%
 
$
(69,866
)
 
100.00
%

Overall, total investments at fair value increased by 9.3%, or $183,052, during the three month period ended March 31, 2019 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation).

Total investments at fair value held by Middle Market Credit Fund, LLC (“Credit Fund”), which is not consolidated with the Company, increased by 7.2%, or $84,787, during the three month period ended March 31, 2019 after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation). As of March 31, 2019, Credit Fund had total investments at fair value of $1,258,295, which comprised 97.8% of first lien senior secured loans, 1.8% of second lien senior secured loans, and 0.4% of equity investments at fair value. As of March 31, 2019, on a fair value basis, approximately 1.7% of Credit Fund’s debt investments bear interest at a fixed rate and approximately 98.3% of Credit Fund’s debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.

As of March 31, 2019, the weighted average yields for our first and second lien debt investments on an amortized cost basis were 9.30% and 11.07%, respectively, with a total weighted average yield of 9.51%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of March 31, 2019. As of March 31, 2019, on a fair value basis, approximately 0.7% of our debt investments bear interest at a fixed rate and approximately 99.3% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.

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As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as “Internal Risk Ratings”:
Internal Risk Ratings Definitions
Rating
  
Definition
1
  
Performing—Low Risk: Borrower is operating more than 10% ahead of the base case.
 
 
2
  
Performing—Stable Risk: Borrower is operating within 10% of the base case (above or below). This is the initial rating assigned to all new borrowers.
 
 
3
  
Performing—Management Notice: Borrower is operating more than 10% below the base case. A financial covenant default may have occurred, but there is a low risk of payment default.
 
 
4
  
Watch List: Borrower is operating more than 20% below the base case and there is a high risk of covenant default, or it may have already occurred. Payments are current although subject to greater uncertainty, and there is moderate to high risk of payment default.
 
 
5
  
Watch List—Possible Loss: Borrower is operating more than 30% below the base case. At the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have occurred. Loss of principal is possible.
 
 
6
  
Watch List—Probable Loss: Borrower is operating more than 40% below the base case, and at the current level of operations and financial condition, the borrower does not have the ability to service and ultimately repay or refinance all outstanding debt on current terms. Payment default is very likely or may have already occurred. Additionally, the prospects for improvement in the borrower’s situation are sufficiently negative that impairment of some or all principal is probable.
Our Investment Adviser’s risk rating model is based on evaluating portfolio company performance in comparison to the base case when considering certain credit metrics including, but not limited to, adjusted EBITDA and net senior leverage as well as specific events including, but not limited to, default and impairment.
Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. In connection with our quarterly valuation process, our Investment Adviser reviews our investment ratings on a regular basis. The following table summarizes the Internal Risk Ratings of our debt portfolio as of March 31, 2019 and December 31, 2018:
 
March 31, 2019
 
December 31, 2018
 
Fair Value
 
% of Fair Value
 
Fair Value
 
% of Fair Value
(dollar amounts in millions)
 
 
 
 
 
 
 
Internal Risk Rating 1
$
70.8

 
3.74
%
 
$
71.0

 
4.12
%
Internal Risk Rating 2
1,381.7

 
73.02

 
1,302.9

 
75.52

Internal Risk Rating 3
212.5

 
11.23

 
208.4

 
12.08

Internal Risk Rating 4
189.2

 
10.00

 
105.1

 
6.09

Internal Risk Rating 5
23.3

 
1.23

 
23.5

 
1.36

Internal Risk Rating 6
14.7

 
0.78

 
14.3

 
0.83

Total
$
1,892.2

 
100.00
%
 
$
1,725.2

 
100.00
%

As of March 31, 2019 and December 31, 2018, the weighted average Internal Risk Rating of our debt investment portfolio was 2.3.

Consolidated Results of Operations
(dollar amounts in thousands, except per share data)

Total investment income for the three month periods ended March 31, 2019 and December 31, 2018 was $55,187 and $56,311, respectively. This $1,124 net decrease during the three month period ended March 31, 2019 compared to the three month period ended December 31, 2018 was primarily due to a decrease in income recognized from the acceleration of OID and prepayment fees from reduced prepayments, partially offset by an increase in interest income from growth in the investment portfolio.


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Total expenses for the three month periods ended March 31, 2019 and December 31, 2018 were $27,625 and $26,900, respectively. This $725 net increase during the three month period ended March 31, 2019 compared to the three month period ended December 31, 2018 was primarily attributable to an increase in interest expense as a result of an increase in average borrowings and LIBOR, partially offset by a decrease in incentive fees.

During the three month period ended March 31, 2019, the Company recorded a net realized gain and change in unrealized appreciation of $6,164. This was primarily driven by a decrease in market yields.

Liquidity and Capital Resources
(dollar amounts in thousands, except per share data)

As of March 31, 2019, the Company had cash and cash equivalents of $40,071, notes payable (before debt issuance costs) of $449,200, and secured borrowings outstanding of $660,959. As of March 31, 2019, the Company had $252,041 of remaining unfunded commitments and $109,420 available for additional borrowings under its revolving credit facilities, subject to leverage and borrowing base restrictions.

Dividend

On May 6, 2019, our Board of Directors declared a quarterly dividend of $0.37 per share, which is payable on July 17, 2019 to stockholders of record as of June 28, 2019.

Conference Call

The Company will host a conference call at 8:30 a.m. EDT on Wednesday, May 8, 2019 to discuss these quarterly financial results. The call and webcast will be available on the TCG BDC website at tcgbdc.com. The call may be accessed by dialing +1 (866) 394-4623 (U.S.) or +1 (409) 350-3158 (international) and referencing “TCG BDC Financial Results Call.” The conference call will be webcast simultaneously via a link on TCG BDC’s website and an archived replay of the webcast also will be available on the website soon after the live call for 21 days.

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TCG BDC, INC.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollar amounts in thousands, except per share data)
 
March 31, 2019
 
December 31, 2018
 
(unaudited)
 
 
ASSETS
 
 
 
Investments, at fair value
 
 
 
Investments—non-controlled/non-affiliated, at fair value (amortized cost of $1,965,496 and $1,799,751, respectively)
$
1,899,537

 
$
1,731,319

Investments—non-controlled/affiliated, at fair value (amortized cost of $14,081 and $13,839, respectively)
21,081

 
18,543

Investments—controlled/affiliated, at fair value (amortized cost of $241,801 and $230,001, respectively)
234,591

 
222,295

Total investments, at fair value (amortized cost of $2,221,378 and $2,043,591, respectively)
2,155,209

 
1,972,157

Cash and cash equivalents
40,071

 
87,186

Receivable for investment sold

 
8,060

Deferred financing costs
4,069

 
3,950

Interest receivable from non-controlled/non-affiliated investments
7,658

 
5,853

Interest receivable from non-controlled/affiliated investments
8

 
3

Interest and dividend receivable from controlled/affiliated investments
7,256

 
7,405

Prepaid expenses and other assets
8

 
129

Total assets
$
2,214,279

 
$
2,084,743

LIABILITIES
 
 
 
Secured borrowings
$
660,959

 
$
514,635

Notes payable, net of unamortized debt issuance costs of $3,095 and $3,157, respectively
446,105

 
446,043

Payable for investments purchased

 
1,870

Due to Investment Adviser
169

 
236

Interest and credit facility fees payable
7,994

 
7,500

Dividend payable
22,681

 
35,497

Base management and incentive fees payable
13,531

 
13,834

Administrative service fees payable
139

 
94

Other accrued expenses and liabilities
2,514

 
1,816

Total liabilities
1,154,092

 
1,021,525

 
 
 
 
NET ASSETS
 
 
 
Common stock, $0.01 par value; 200,000,000 shares authorized; 61,272,069 and 62,230,251 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
613

 
622

Paid-in capital in excess of par value
1,160,258

 
1,174,334

Offering costs
(1,633
)
 
(1,633
)
Total distributable earnings (loss)
(99,051
)
 
(110,105
)
Total net assets
$
1,060,187

 
$
1,063,218

NET ASSETS PER SHARE
$
17.30

 
$
17.09



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TCG BDC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollar amounts in thousands, except per share data)
(unaudited)
 
 
For the three month periods ended
 
 
March 31, 2019
 
December 31, 2018
Investment income:
 
 
 
 
From non-controlled/non-affiliated investments:
 
 
 
 
Interest income
 
$
45,242

 
$
45,500

Other income
 
2,028

 
2,724

Total investment income from non-controlled/non-affiliated investments
 
47,270

 
48,224

From non-controlled/affiliated investments:
 
 
 
 
Interest income
 
379

 
377

Total investment income from non-controlled/affiliated investments
 
379

 
377

From controlled/affiliated investments:
 
 
 
 
Interest income
 
3,538

 
4,010

Dividend income
 
4,000

 
3,700

Total investment income from controlled/affiliated investments
 
7,538

 
7,710

Total investment income
 
55,187

 
56,311

Expenses:
 
 
 
 
Base management fees
 
7,685

 
7,595

Incentive fees
 
5,846

 
6,239

Professional fees
 
745

 
814

Administrative service fees
 
216

 
151

Interest expense
 
11,991

 
10,905

Credit facility fees
 
568

 
606

Directors’ fees and expenses
 
93

 
87

Other general and administrative
 
421

 
343

Total expenses
 
27,565

 
26,740

Net investment income (loss) before taxes
 
27,622

 
29,571

Excise tax expense
 
60

 
160

Net investment income (loss)
 
27,562

 
29,411

Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments:
 
 
 
 
Net realized gain (loss) from:
 
 
 
 
Non-controlled/non-affiliated investments
 
899

 
1,619

Net change in unrealized appreciation (depreciation):
 
 
 
 
Non-controlled/non-affiliated
 
2,473

 
(29,407
)
Non-controlled/affiliated
 
2,296

 
4,326

Controlled/affiliated
 
496

 
(7,109
)
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investments
 
6,164

 
(30,571
)
Net increase (decrease) in net assets resulting from operations
 
$
33,726

 
$
(1,160
)
Basic and diluted earnings per common share
 
$
0.55

 
$
(0.02
)
Weighted-average shares of common stock outstanding—Basic and Diluted
 
61,772,774

 
62,496,338



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About TCG BDC, Inc.
TCG BDC is an externally managed specialty finance company focused on lending to middle-market companies. TCG BDC is managed by Carlyle Global Credit Investment Management L.L.C., an SEC-registered investment adviser and a wholly owned subsidiary of The Carlyle Group L.P. Since it commenced investment operations in May 2013 through March 31, 2019, TCG BDC has invested approximately $4.9 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. TCG BDC’s investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies. TCG BDC has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.

Web: tcgbdc.com
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” “plans,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. You should not place undue reliance on these forward-looking statements, which speak only as of the date on which we make it. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in filings we make with the Securities and Exchange Commission, and it is not possible for us to predict or identify all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contacts:
Investors:
Media:
Daniel Harris
Elizabeth Gill
+1-212-813-4527
daniel.harris@carlyle.com
+1-202-729-5385
elizabeth.gill@carlyle.com


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