BlackRock TCP Capital (NASDAQ:TCPC) and BlackRock Capital Investment (NASDAQ:BKCC) said on Wednesday that the business development companies entered into an agreement for BKCC to merge into a wholly-owned, indirect subsidiary of TCPC.
BlackRock Capital Investment (BKCC) stock gained 3.1% in Wednesday after-hours trading, and BlackRock TCP Capital (TCPC) stock rose 0.8%.
After the merger, TCPC will continue to trade on the Nasdaq Global Select Market under its current ticker symbol and will remain the surviving entity.
Under the proposed terms, BlackRock Capital Investment (BKCC) stockholders will receive newly issued shares of TCPC common stock based on the ratio of the BKCC net asset value per share divided by the TCPC NAV per share, to be determined shortly before closing.
In connection with the proposed merger, TCPC's adviser, a wholly-owned, indirect subsidiary of BlackRock (BLK), has agreed to reduce its base management fee rate, waive its fee if TCPC's adjusted net investment income per share falls below $0.32 in any of the first four fiscal quarters after the deal closes, and cover 50% of merger transaction costs for both BlackRock TCP Capital (TCPC) and BlackRock Capital Investment (BKCC) to be capped at a combined $6M.
The deal is expected to add to net investment income over time through reduced management fees, lower combined operating expenses, and opportunities to increase the portfolio through combined leverage capacity, the companies said.
The BlackRock (BLK) subsidiary that advises TCPC agreed to reduce its base management fee to 1.25% from 1.50% on assets equal to or below 200% of the net asset value of TCPC, with no change to the basis of the calculation. However, its fee rate on assets that exceed 200% of net asset value of TCPC would remain at 1.00%.
A conference call will be held on Sept. 7 at 10:00 AM ET.