BlackRock Capital Investment Corp (BKCC) 2009 Q4 法說會逐字稿

Good afternoon. My name is Kevin, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the BlackRock Kelso Capital Corporation Investor Teleconference. Our hosts for today's call will be Chairman and Chief Executive Officer James R. Maher; Chief Operating Officer Michael B. Lazar; and Chief Financial Officer Frank D. Gordon.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

(Operator Instructions)

Thank you. Mr. Maher, you may begin the conference.

Thank you, Kevin. Welcome to our fourth quarter conference call. We will begin by having Frank review some general conference call information.

Thank you, Jim. Before we begin our remarks today, I would like to point out that during the course of this conference call we may make a number of forward-looking statements. We call to your attention the fact that BlackRock Kelso Capital Corporation's actual results may differ from these statements.

As you know, BlackRock Kelso Capital Corporation has filed with the SEC reports which list some of the factors which may cause BlackRock Kelso Capital Corporation's results to differ materially from these statements. Finally, BlackRock Kelso Capital Corporation assumes no duty to and does not undertake to update any forward-looking statements.

I would now like to turn the call back over to Jim.

Thanks, Frank. We're pleased to have the opportunity to speak with you today. I'd like to begin by highlighting a few things about our fourth quarter and full year 2009 performance. Our portfolio continues to produce strong investment income, and there are positive signs at many of our companies. With a few exceptions, our portfolio companies are benefiting from the improving economic environment. We continue to actively manage our portfolio.

Since the beginning of 2009, we have exited several investments with either low interest rates or significant PIK interest rate features. We generated over $200 million in cash and reduced our leverage. During this time we also took the opportunity to invest in and to reconstitute the capital structure of some portfolio companies to reduce risk and improve our ability to achieve above market returns.

For the quarter, we had net investment income, before incentive fees, of $0.39 a share, consistent with our third quarter results. After incentive fees, net investment income was $0.09 a share. Last week we announced that our Board of Directors has declared a regular first quarter dividend of $0.32 a share, which is unchanged from our fourth quarter dividend. After the payment of incentive fees, our net investment income for 2009 was $1.36 per share, compared to dividend payments of $0.80 per share and a current annual dividend run rate of $1.28 per share.

Our balance sheet remains very conservatively positioned. Debt stood at less than $300 million on December 31st, as compared with $426 million at year end 2008. At the end of the fourth quarter, and subject to leverage restrictions, we had more than $254 million of cash equivalents and borrowing availability under our senior credit facility. Our statutory BDC asset coverage test stood at 0.55 to one, an improvement from the 0.84 to one level at year end 2008.

Since year end we've reduced our debt balance and leverage ratio even further, with our leverage now at less than 0.5 to one. Yesterday our credit facility stood at $251 million outstanding. We're also pleased that we have made significant progress on the first phase of our credit facility extension, and would especially like to thank our banking partners for their support. Michael will address our credit facility in more detail later in the call.

As you know, at a special meeting of stockholders on February 8th, we received approval from our stockholders to issue shares at a discount to net asset value. While our closing share price today was above our current net asset value, we believe that having this flexibility will allow us to be opportunistic about raising additional equity capital.

While we are certainly mindful of any potential dilution to our net asset value, we believe that the current investment environment provides us with an attractive opportunity to put capital to work at rates that would be accretive to our net investment income. Access to equity and debt capital will allow us to resume our profitable growth into the future.

Looking forward, there are attractive investment opportunities available in the middle market and a dwindling number of capital providers to middle market companies. We're excited to have the capital resources and disciplined investment process in place to take advantage of these opportunities.

Including the dividends declared last week, we will have paid dividends equal to $5.88 per share since our inception in July of 2005. We remain conservatively positioned for the long term. Our balance sheet is solid, and we believe that we have the financial flexibility to profit from the improving market and economic environment throughout 2010 and beyond.

Before I ask Mike to discuss our portfolio activity and market conditions in more detail, I wanted to mention that, for the first time, we will be posting some additional information about BlackRock Kelso Capital on our website later this week. We're not going to go through these slides on this call, but we are hopeful that this additional information provides everyone with more detail about our portfolio, market conditions, and our differentiated underwriting process.

Mike, please continue with our prepared remarks.

Thank you, Jim, and thanks to everybody for joining our earnings conference call today. In terms of portfolio activity, the environment for new transactions was very slow throughout 2009. As we have said on past earnings calls, we spent much of our time and attention in 2009 focused on activity in our portfolio companies. This remained the case during the fourth quarter.

We reviewed both new investment opportunities and follow-on investment opportunities in several of our existing portfolio companies during the quarter. Portfolio acquisitions during the quarter totaled $8.6 million, all in existing portfolio companies. This activity was once again focused on investments in portfolio companies that improved their capital positions or advanced our position in a capital structure. Repayments of investments equaled $56 million during the fourth quarter.

Since year end, we have had the opportunity to exit several additional investments, including our investment in Marquette Transportation Company, PIK notes. This particular exit removed the single largest non-cashed interest security from our balance sheet. The volume of new transaction opportunities rebounded somewhat in the third quarter of last year. That increase has been sustained and accelerated into the fourth quarter, and the first quarter of 2010.

The current investment environment is attractive. The market is currently characterized by lower leverage multiples of cash flow, resulting in better loan to value coverage than was available in 2007 and 2008. In addition, there are fewer market participants, yielding BlackRock Kelso Capital improved all in return opportunities. In addition to these positive general market trends, the middle market has offered and is expected to continue to offer the most attractive overall investment profile.

We believe that our portfolio continues to be very well positioned for the current economic environment. At year end our portfolio consisted of 57 companies. It was 59% invested in senior secured loans, and 6% invested in senior secured notes. At the end of the fourth quarter, 5% of our portfolio was invested in equity securities, and less than 1% in cash and cash equivalents. The remainder of the investment portfolio, or approximately 30%, was comprised of unsecured or subordinated debt securities.

Throughout the economic downturn, BlackRock Kelso Capital worked actively to enhance the risk-adjusted returns of our investment portfolio by repricing securities; working with sponsors to arrange for significant equity and junior capital investments to support our portfolio companies; and to restructure investments to capture increased economics.

Both junior capital contributions and repricings have slowed dramatically in the fourth quarter and into the first quarter of 2010. This trend coincides with improvements in general economic conditions, as well as the improvement in the credit market.

Our portfolio valuations improved overall during the quarter. The total portfolio experienced appreciation, net of reversals, of approximately $12 million during the quarter, and our net asset value increased approximately $44 million since its low on March 31st. At December 31, 2009 our portfolio was valued at 80.3% of cost, an increase from the second quarter low of 72.8% of cost.

We are pleased that the performance of our portfolio companies continues to be strong. At December 31, 2009 3.5% of our total debt investments at fair market value were on non-accrual status. The fair value of these assets is $27.9 million at December 31st, compared with $19.9 million at September 30th. The cost basis of our debt investments on non-accrual was $63.9 million, or 6.5% of amortized cost at year end.

This slight increase in non-accruals is the net result of one new security placed on non-accrual, and three new securities removed from non-accrual over a smaller net total portfolio. The most significant of these three factors is the denominator effect of having a smaller portfolio.

During the fourth quarter our weighted average yield on income-producing securities increased to 11.2% from 10.9% at the end of the third quarter. At year end 2009, the Company was in compliance with regulatory coverage requirements, with an asset coverage ratio of 282%, and was in compliance with all financial covenants under its credit facility.

At year end we had net borrowings of $296 million, and our borrowings amounted to only 35% of the fair market value of our portfolio at year end. Taking our most restrictive debt covenants into account, we had cash equivalents and borrowing capacity of more than $180 million at year end. Since year end, we have reduced our debt balance even further. As Jim mentioned earlier, as of March 9, 2010, debt outstanding under our credit facility was down to $251 million.

Our current $545 million bank credit facility matures in December of 2010. During the first quarter of 2010, we have begun to receive commitments from several of our existing lenders to extend a substantial portion of our current bank loan commitments through December of 2013.

In addition, after we have completed the extension process with existing lenders, we expect to invite new lenders to participate in the facility. The amended facility will have increases in spreads payable on the extended commitments, while existing commitments will continue to bear interest at existing rates of LIBOR plus 0.00875%, and LIBOR plus 1.5%.

Our net asset value is stable in the fourth quarter at approximately $540 million. This represents an increase of approximately $30 million from year end 2008, and $44 million from March 31, 2009. The increase is due, in part, to improving market conditions, as well as improved performance at several portfolio companies. At year end, our NAV per share was $9.55, an increase of $0.31 from June 30th, and $0.51 since March 31st.

Prior to the effect of the recognition of our incentive fee in the fourth quarter, our net asset value would have been increased to $9.85 per share from $9.59 per share on September 30, 2009. Our NAV per share is $0.08 lower than it otherwise would have been, due to the net impact of our dividend reinvestments and share repurchase plan activity during 2009.

We incurred a provision for excise taxes of approximately $1 million in 2009, relating to taxable income that was carried over into 2010. Net investment income in 2009 totaled $1.36 per share, and dividends declared during 2009 totaled $0.80 per share. With respect to exits, since inception we have exited 44 investments. Of those, we have exited 43 for proceeds that exceeded the fair market value in our most recent financial statements.

We did take the opportunity to realize some losses in 2009, which offset income and reduced the amount of excise tax paid. Realized losses of $106 million were matched by a light amount of net unrealized depreciation reversals. In short, the losses were already reflected in our fair market values.

We believe that economic conditions and the economic outlook have improved considerably this year. During 2009 we generated net investment income, before incentive fees, of $93 million, or $1.66 per share. After giving effect to incentive fees for 2009 at $1.36 per share of net investment income, we exceeded our 2009 dividend payments by $0.56 per share.

With that, I would now like to turn the call over to Frank Gordon to review some of the GAAP financial information for the fourth quarter.

Thanks, Mike, and hello, everyone. I'll now take a few moments to review some of the details of our fourth quarter and full year 2009 GAAP financial information. Net investment income totaled $5 million and $76.1 million, or $0.09 per share and $1.36 per share for the three months in year ended December 31, 2009.

This compares with net investment income of $23 million and $95.1 million, or $0.42 per share and $1.76 per share for the three months of the year ended December 31, 2008. The decrease in net investment income reflects the impact of lower levels of LIBOR on our floating rate debt investments, and a lower level of total investment compared with the prior period.

During the fourth quarter, for the first time since mid 2007, we incurred an incentive management fee to our investment advisor due to continued strong investment earnings, without the substantial net capital depreciation that had occurred in prior periods. The incentive fee was $16.8 million.

Total expenses for the three months in year ended December 31, 2009 were $25.3 million and $48.8 million, versus $12.1 million and $48.1 million for the three months in year ended December 31, 2008. The increase in expenses is largely due to the incentive fee that I just mentioned, partially offset by lower interest expense in 2009.

Total net realized gain or loss for the three months ended December 31, 2009 was a loss of $45.4 million. The net realized loss resulted primarily from the write-off of our investments in AL Solutions, Tygem Holdings, which had been fair valued at zero for over a year. Substantially all of the net realized loss represents amounts that had been reflected in unrealized depreciation on investments in prior periods. Net realized gain or loss for the year was a loss of $110.2 million.

For the three months ended December 31, 2009, the net change in unrealized appreciation or depreciation on the Company's investments and foreign currency translation was a decrease in unrealized depreciation of $56.7 million, versus an increase in unrealized depreciation of $134.6 million for the three months ended December 31, 2008.

The decrease in unrealized depreciation on investments for the three months ended December 31, 2009 includes $46.1 million relating to reversals of prior period net unrealized depreciation as a result of investment dispositions. Net unrealized appreciation was $207.9 million at December 31, 2009, an improvement of $101.4 million from the December 31, 2008 level of $309.3 million.

The valuations of our investments were favorably impacted by market-wide decreases in interest yields, as well as increases in multiples used to determine the fair value of some of our investments. Market-wide movements in trading multiples are not necessarily indicative of any fundamental change in the condition or prospects of our portfolio companies.

The weighted average yield of the debt and income-producing equity securities in our portfolio at their current cost basis was 11.2% at December 31, 2009, compared to 11% at December 31, 2008. The weighted average yields on our senior secured loans and other debt securities at their current cost basis were 9.4% and 14.2% at December 31, 2009.

I'd now like to turn the call back over to Jim.

Thanks, Frank. As I think you can tell, we're feeling pretty good about where we are at this point in time. As I've already mentioned, the business environment has stabilized; our portfolio is performing well; we've strengthened our already well-capitalized balance sheet; and we're in discussions to extend a significant portion of our debt maturities.

We have actively improved our portfolio, selectively exiting some of our lower-yielding portfolio companies. And we believe that BlackRock Kelso Capital is now well positioned to return to actively growing our portfolio. We expect the environment to support our focus on originating and structuring new transactions. In short, we are in a position of strength to produce profitable growth in 2010 and beyond.

With that, I'd like to thank once again our highly-talented investment team for their hard work and diligence, and thank you for your continued interest in BlackRock Kelso Capital.

Kevin, please open the call to questions.

(Operator Instructions)

Our first quarter will come from Greg Mason from Stifel Nicolaus.

Great. Good afternoon, gentlemen. You said new opportunities are starting to accelerate. Could you give us a little more color on what your pipeline looks like, how many potential transactions are you looking at, and when do you expect to close a new loan in your portfolio?

Why don't you go, Mike?

Sure. Hey, Greg, how are you? I guess taking the second part of your question first, we have actively pursued a few investments over the recent couple of weeks and months. And, as has always been the case in our business, and we've not talked about this in a while but had talked about it frequently prior to the current credit environment, the business can be lumpy.

We look at lots of opportunities. We conduct due diligence on lots of things that we start off wanting to be involved with. We take our time, focused on companies, and actively pursue the business. Not every opportunity turns into an actual investment, of course. And so, we're optimistic about where we are today and what the current market conditions look like.

That doesn't mean we're going to be able to get to the finish line on anything. Transactions don't go through for all sorts of reasons all the time. Having said that, during the course of 2009, we track deals that we're actively pursuing pretty closely, and the number of deals that we reviewed with an intention to make an investment in the first quarter had basically doubled by the time we had gotten around to the fourth quarter -- order of magnitude, 30 or so transactions in the first quarter compared to order of magnitude, just under 60 transactions during the fourth. That has increased, or continued at that greater pace, if not increased, into the first quarter of this year.

Again, important reminder -- just because we're looking at something actively and attempting to make an investment doesn't mean that we'll come to final terms and be able to invest the capital. As you know, the process of due diligence and structuring loans for us tends to take weeks and months rather than hours and days. So stuff that we're working on now may or may not happen in the next couple of days, weeks or months.

Okay, great. And the three companies you said were removed from non-accrual status -- were those moved back to performing status or were some sold off? Can you give us a little color around that?

I think -- I'm a little cautious about answering it too directly, because our K is not out yet with the full schedule of investments and footnotes. But I would say those -- certainly one was in the category of realizing a loss with the intent to improve our excise tax position, and that is sort of the largest of that group of securities.

Okay. And then one last question and then I'll pop back in the queue. Were there -- when we look at your interest income, it was up $1 million over last quarter, yet the portfolio shrunk just a little bit -- were there any one-time items in this quarter or one-time items that negatively impacted last quarter? Just trying to look for a good run rate on the current portfolio interest income.

I'd ask Frank to just go through those details.

No, it's fairly stable. I think one of the things that helped us a lot was that the exits we had, most of them did not take place till late in December, so.

Okay, great. Thank you, gentlemen.

Our next question will come from Jasper Birch from Macquarie.

Hey, guys, thanks for taking my question. Just circling back, looking at the last quarter -- I mean, last quarter's call, you really seemed like you guys gave some commentary that sort of seemed like investments would pick up. And I appreciate the color you just gave to Greg.

But I was just wondering, what exactly, why didn't, and what was really driving the lack of new investment generation? Was it that you didn't like the prices you were getting, didn't like the deal quality? Were you hesitant until you started working out your credit facility extension?

I think, Jasper, you've touched on three things that would each be true, depending upon the particular situation, the particular investment. Earlier in the sort of quarter or earlier in, certainly through most of 2009, we were rather cautious, and we spent a lot of time examining our existing portfolio companies and tried to put capital to work opportunistically in them because those opportunities existed.

There had been distressed sellers of good securities in good companies. We spent a lot of time enticing junior capital providers read equity sponsors to put more capital in businesses to support them. And we spent a lot of time with that kind of a focus. We turned our attention to new investment opportunities somewhere in the sort of fourth quarter time frame. And again, the gestation period of a deal for us can last for two, three, four months on the one hand.

And further, we do a lot of work to find transaction opportunities that we like. They don't always get to the finish line. Not that we don't participate in the transaction, but perhaps the seller doesn't end up selling the business; the buyer finds a reason not to buy the business. The transaction isn't consummated. And that happens on a pretty high percentage of things that we look at. And as I mentioned earlier, that contributes to why our business is somewhat lumpy.

I guess I'd also add that any number or set of circumstances we might be looking at a transaction with a particular equity sponsor, and the transaction may get done with somebody else. So, it may well be on a number of occasions that I can think of recently where that occurred. I would also say that, during this period of time, the number of transactions that we've looked at has increased, and also the quality of the transactions have increased.

And then finally, it certainly in the latter part of this year and into the first quarter of this year, the number of deals that haven't reached conclusion is a lot higher than it has been historically. People seem -- equity sponsors are, I think, doubly diligent and oftentimes a little slow to get things done at this point in time. The timeframe has clearly expanded since, over the past couple of months.

Okay, that's really helpful color. And then just looking at your post quarter and divestiture -- I think it was something like $79 million -- can you give us any indication where that would be compared to your fair value markets that you'll be coming out with? And also, are you still mostly exiting low yielding in PIK securities, or what types of securities have you been divesting?

I'm not sure how much color we can give further on the first quarter exits. The one that I mentioned specifically was a rather large PIK investment. It was a good investment for us. We were repaid in full on that debt security. It had been, during prior periods, it had been fair valued based on where the market was.

And in some of those periods it had been marked at less than par because of the market more than because of the performance of that particular company. And that happened to be a relatively high coupon security but one again that, as we said before, was all PIK interest. So that was really a -- something that we did as part of looking at the overall portfolio.

If you go through our schedule of investments, there are not, there are no longer a -- there are not very many low yielding investments at this point. And there still are some, and we continue to look for opportunities to exit those. But overall, we're very pleased with where the portfolio is, and we're not actively necessarily looking to exit anything at this point.

Okay, excellent. And then, do you have any indication on when we might get an announcement concerning your debt facility extension?

Our hope is that there'll be a more robust and complete disclosure soon.

All right.

That's about the best we can say.

Understandable. Thank you guys, again.

Thank you.

Our next question will come from Chris Harris from Wells Fargo.

Great, thank you. Mike, definitely appreciate the commentary here on the lender negotiations. Just wondering -- I know you guys are still kind of in the middle of this process -- but maybe if there's some sort of guidance you can give us on kind of the ballpark range and the size the facility might be, and potential cost?

Sure. I think maybe just as a starting point -- and I think Jim would probably want to add to this -- we're very careful to try to balance the extended commitments versus the existing commitments.

And when we're done with this first phase of our extension process, we will still have in place, we believe, the substantial majority of the commitments that are there today through this year end at, with a good portion of those at the original pricing. Which is something that we look to extend to, sort of to its reasonable conclusion.

As such, we would look to, as I mentioned in the comments, somewhere after this process is done -- shortly, we hope -- go out to new lenders that are not existing participants, as the time is appropriate and as the capital is needed, to expand and extend our revolver and our credit facilities down the road as time goes on and as the portfolio requires that type of financing.

I think what I would add is that, in terms of the terms, I think it's fair to say that we are -- well, first of all, I think we're towards the end of the process rather than in the middle of the process. And secondly, I would say in terms of the terms, there are some benchmarks out there in terms of what I would call recent transactions. And I would draw your -- I would point you in that direction. And that's about all I could tell you at this point in time.

Okay. And then I guess as you guys begin to originate again, become more active -- I know your current portfolio is kind of more weighted towards senior debt with kind of a high concentration in second lien. How might that allocation change over time as you originate new investments? And then I guess along the same lines, what type of securities do you think offer the most attractive risk/reward profile in the current environment?

I don't think the mix of the securities will change dramatically going forward. And I think the -- we look at each investment on a sort of company by company basis, to figure out where the most attractive risk/reward is. We tend to be the junior debt in the capital structure. And depending on the company and depending on the investment, we generally think that's the most attractive risk/reward in the capital structure.

And, Chris, obviously I agree with what Jim just said. I would suggest that we had, in the past -- our existing credit facility is very, very attractively priced. And so many of those junior debt capital opportunities that we took advantage of in the past were structured on a floating rate basis.

And I would just suggest that going forward there will probably be a greater propensity toward fixed rate transactions, given what we expect to happen to the debt financing costs in our business and just generally, as well as where LIBOR rates are today.

Okay, great. Thanks a lot, guys.

Our next question will come from Jim Bowen from Lazard Capital.

Thanks a lot. It looks like over the last few quarters here you've been deleveraging. And maybe that's ahead of or during these negotiations with the banks. And, Jim, like you said, that sounds like that you're toward the end of that process.

When you think about your leverage level -- kind of a target leverage level, sort of once you get on the other side of getting the refinancing done, where do you think that a good target leverage level is, say that you would get to, say, over the next year or two?

I'm really reluctant to come up with an absolute target. I think it depends on the availability of equity capital, what's going on in the credit markets, the availability of credit to us in terms of what level we're at. It certainly is higher than we are today, but it's hard to pinpoint.

We look -- we sort of wake up every day and think about the availability of capital when we think about leverage levels. And capital is available today. It's probably not available in its most robust form. And so, we'd probably be lower than we might be at some other point in time in the credit cycle.

And, Jim, this is Mike. Obviously, it wouldn't surprise you to hear us say what Jim just said. But I would add to that, or maybe say the same thing a little bit differently, which is that like we do with our portfolio companies and like we do when we perform credit analysis on potential new investments, the thing we consider maybe above all others is liquidity -- availability of capital and liquidity. And so when we think about our leverage level, we think about how much capital we have access to if we need it.

And so, we think about how much liquidity there is in our business. We look at that as we think about upcoming investment opportunities we intend to make. And we do that as we monitor our portfolio, and we look at things that we expect to be repaid and cash that we expect to collect. And so, we spend a lot of time focusing on our liquidity and our available capital.

And as we go out and think about making new investments, we always want to make sure that there's excess capital available to us in our business at a reasonable price before we go do that. And that's really the mantra more than some specific number of point this or point that on a BDC leverage basis.

I think the last time we talked we mentioned that we have a fair amount of visibility into our portfolio and what's likely to happen, what's likely to be sold, what's likely to be IPO'd. And that certainly enters into our thinking.

Okay. Great. Thanks a lot, gentlemen.

Thank you.

(Operator Instructions)

Our next question will come from Greg Mason from Stifel Nicolaus.

Great. Frank, could you talk to us about how you account for origination fees? As we start seeing new investments come along, I assume there are probably up front fees associated with those. And some BDCs amortize them over the life while some take them up front. Can you talk about how you guys have dealt with those in the past?

Sure. It appears in our footnotes and financials, it's a significant accounting policy. But basically, for up front fees where we perform substantial services we do take them into income for tax purposes, but for GAAP we amortize all such fees over the life.

Great. Thank you. And can you talk about the three, I believe you had three exits. Your portfolio said you went from 60 companies to 57. I think you mentioned AL and Tygem. What was the other exit during the quarter?

Well, you see that when our Q -- I'm sorry, our 10-K is going to be filed in a day or so, so I don't want to go into specifics until then. But we're very pleased with the volume of the exits. And so, as you see, the number's about $56 million, I believe.

Okay. And then one final question. Several BDCs have either received an SBIC license or filed for one. What do you guys think about an SBIC license, and have you done any work on a MAQ for that?

Sure, Greg, I mean, I think the answer is yes. We've looked at it. We've thought about it. We certainly wouldn't close the door to doing anything in the future. However, I think as a general matter we like the business that we're in. We think the part of the market that we focus on and the conservative manner in which we focus on it, from a financing and structural perspective, suits our business model, suits our strengths, and suits the way that we like to put capital to work just fine.

There may be a point in the future where gaining an SBIC license and accessing that capital may make some sense but, at the moment, we think that the BDC structure, for what we do and how we do it, is a very stable and profitable way to be in our business.

Great, thanks, guys.

Our next question will come from [Aaron Saganovitch] from Ladenburg.

Hi, guys. Just a quick question on the approval that you got to issue new equity below NAV. Is there any restrictions surrounding this at all?

As a practical matter, no. Except if, except the general notion that we've expressed before, is that we want, we will raise equity capital at a point in time or at a price when we think we can effectively put money to work and not dilute our net investment income.

And I would just add --

There's a technical --

Yes, there's --

-- but as a practical matter, I don't think it's a restriction. But --

Right, no. And just technically obviously the independent directors need to make a determination that a sale is going to be in the best interests of the Company and the shareholders. And that's done entirely with the independent directors on our board.

And they'll obviously go through that analysis and that price, as well as any dilution, if any, would be considered. And they'd have to sort of come to the conclusion that any such dilution would be less -- it would be in the best interests of the Company to suffer that dilution, given what we expect to be able to do with the capital.

Okay. There was just some language in the release that basically said something about the price has to be closely approximated to where the market value of the stock was. I just wanted to make sure there wasn't any specifics around it.

(Operator Instructions)

And we have no further audio questions at this time.

Well, thank you all. We appreciate -- once again, we appreciate your participating in this, and we appreciate your support. And if you have further questions, you know we're here and available for you at any time. Thanks again.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.