BlackRock TCP Capital Corp.

Hello, everyone. Thank you for joining us and welcome to the BlackRock TCP Capital Corp. Q2 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Alex Dahl, a member of the BlackRock TCP Capital Corp. Investor Relations Team. Alex, please go ahead.

Thank you, Operator. Before we begin, I will note that this conference call may contain forward-looking statements based on management's estimates and assumptions at the time such statements are made, which are not guarantees of future performance. Forward-looking statements involve risks and uncertainties and actual results could differ materially from those projected. For more information, please refer to the risk factors discussed in our Form 10-Q and the Form 8-K filed with the SEC today, along with the associated press release. Any forward-looking statements made on this call are as of today and are subject to change without notice. Additionally, certain information discussed and presented may have been derived from third-party sources and has not been independently verified. Accordingly, we make no representation or warranty with respect to such information. Before we begin, I would also like to note that today's discussion includes references to certain non-GAAP financial measures, including adjusted net investment income. As detailed in our earnings press release, Adjusted Net Investment Income excludes the amortization of the purchase accounting discount resulting from our merger with BCIC and is calculated in accordance with GAAP. A full reconciliation of Adjusted Net Investment Income to GAAP Net Investment Income, as well as other non-GAAP financial metrics, is included in the earnings press release and 10-Q. Earlier today, we issued a press release announcing our results for the second quarter ended June 30th, 2026, as well as the portfolio sale transaction we just completed. We posted a supplemental presentation with information on both to our website at www.tcpcapital.com. To view the slide presentation, which we will refer to on today's call, Please click 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. Now I will turn the call over to our Chairman, CEO, and Co-CIO, Phil Tseng.

Thank you, Alex, and thank you to our investors and analysts for joining us. Today, I'll start with an overview of the portfolio sale transaction we announced this morning, followed by the highlights of our second quarter 2026 performance. Then Jason Mehring, our president, will cover portfolio and investment activity, and Erik Cuellar, our CFO, will walk through our financial results and our balance sheet. I'll provide closing remarks before we open the call for questions. We're also joined by Dan Worrell, our co-CIO, who will be available for questions. Let me begin with the transaction. This is a milestone for TCPC that meaningfully accelerates the work already underway to strengthen our financial position and reshape our investment portfolio. This transaction materially lowers leverage, reduces investment position sizes, and significantly enhances our investment capacity while realizing a substantial premium to the value applied by TCPC's current share price. Looking forward, it provides substantially greater financial, investment, and operational flexibility, creating a stronger foundation for delivering long-term shareholder value. We will step through the transaction at a high level. Additional detail can be found in the subsequent events disclosure section of the 10-Q. TCPC transferred approximately $523 million of investments across 78 portfolio companies into a continuation vehicle sponsored by Pantheon. The assets sold comprise approximately 48% of the fair market value of our pre-transaction debt portfolio and have broadly similar sector, lien, and credit characteristics. The assets include all collateral underlying the recently issued BlackRock DLF 2026C CLO, plus additional contributed investments. TCTC retained a direct interest in substantially all of the portfolio companies, transferring on average approximately two-thirds of each investment position to the vehicle. The company retained a 5% equity interest in the continuation vehicle, and TCPC's investment advisor will also act as the investment advisor for the vehicle without compensation. The continuation vehicle assumed all of the CLO liabilities. The transaction was priced at 95% of the December 31, 2025 gross fair market value of the assets sold, subject to customary adjustments including unfunded commitments, portfolio repayments, and investment income generated prior to closing and other items as more fully outlined in Appendix A of the AK we filed this morning. The transaction is expected to result in a NAV decline of approximately 10.4% or 68 cents per share based on June 30 NAV. Our Board of Directors obtained a third-party fairness opinion from Lincoln International in connection with the transaction. The strategic impact of the transaction is substantial. The approximately $152 million of proceeds were used primarily to reduce debt, and together with deconsolidation of the CLO and post-quarter-end repayments, TCPC has reduced net leverage to approximately 0.4 times on a pro forma basis, and unfunded commitments to below $40 million. and more. To help evaluate the best way to use that flexibility to create further long-term shareholder value, the Board has engaged Keith, Briette and Woods to assist with a strategic review. This review will consider a range of options, including, but not limited to, reinvesting the portfolio, returning capital to shareholders, pursuing strategic combinations or other corporate transactions or some combination of these options. I want to thank everyone involved in the transaction. It was a complex process and the hard work required reflects the firm's commitment to TCPC and its shareholders. With that, let me turn to our second quarter results. Apart from the transaction, we continued to make progress against our strategic priorities during the second quarter. including reducing non-accruals, strengthening the balance sheet, and advancing our portfolio repositioning efforts. While quarterly NAV performance reflected issuer-specific developments at a small number of portfolio companies, broader portfolio performance was generally in line with our expectations and we experienced strong repayment volumes. NAV in the quarter declined approximately 2.1% to $6.58 per share. primarily reflecting developments at Pluralsight, PVHC, and Zillion, as well as realized losses on our exits of Auto Alert and BCOM. Nautic rules declined to 1.6% of the portfolio at fair value and 7.4% at cost, from 2.8% and 7.6% respectively at the end of the first quarter. The improvement was driven in large part by positive developments at Thrasio, which repaid $22 million. We removed our remaining $3.7 million position at Thrasio from non-accrual status, as we expect this position will be paid down in full, given the current health of the business. As you may recall, we restructured our investment in Thrasio in early 2024, and we are pleased with this outcome, which we believe reflects the benefits of active portfolio management and patience. Repayment activity was strong in the second quarter, totaling $111.6 million in payoffs and paydowns and resulting in net repayments of $86.6 million, which advanced our portfolio repositioning efforts. In addition to Thrasio, we received repayments of $14.9 million from StarRes, $13.1 million from AutoAlert, and an additional $48.7 million across five other companies. This repayment activity also strengthened the balance sheet, with net leverage declining to 1.38 times at quarter end from 1.48 times at the end of the first quarter. Following the portfolio sale transaction and post-quarter end repayments completed to date, net leverage is expected to decline to approximately 0.4 times on a pro forma basis and to less than 0.3 times after additional portfolio company paydowns from transactions that have been announced. Turning to capital allocation, on July 30, 2026, our board declared a third quarter dividend of 17 cents per share, payable on September 30th to shareholders of record as of September 16th. We also repurchased 156,370 shares of TCPC stock during the second quarter at a weighted average price of $3.78 per share. Now, I'll turn the call over to Jason to discuss the portfolio and investment activity in more detail.