BlackRock Capital Investment Corp (BKCC) 2011 Q4 法說會逐字稿

Good afternoon. My name is Ashley, 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; chief financial officer, Corinne Pankovcin; and secretary of the company and general counsel of the advisor, Laurence D. Parades. 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)

Mr. Maher, you may begin your conference.

Thank you, Ashley, and welcome to our fourth quarter conference call. Before we begin, Larry will review some general conference call information.

Thank you, Jim. Before we begin our remarks today, I would like to point out that certain comments made during the course of this conference call and within corresponding documents contain forward-looking statements subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may, and similar expressions.

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.

BlackRock Kelso Capital Corporation assumes no duty to and does not undertake to update any forward-looking statements. Additionally, certain information discussed and presented may have been derived from third party sources and has not been independently verified. Accordingly, BlackRock Kelso Capital Corporation makes no representation or warranty with respect to such information.

New this quarter, we would like to note that we've posted to our website an investor presentation that complements this call. Shortly, Jim and Mike will highlight some of the information contained in the presentation. At this time, we would like to invite participants to access the presentation by going to our website at www.blackrockkelso.com and clicking the March 2012 investor presentation link in the presentations section of the investor relations page. With that, I would now like to turn the call back over to Jim.

Thanks, Larry. Good afternoon, and thank you for joining our call today. We are pleased to report that we had a busy and productive fourth quarter, capping off a solid year for new investments for BlackRock Kelso Capital.

In the quarter, we made new investments aggregating $141 million. On a net basis, the portfolio grew more than $50 million. This brings new investments for the year to more than $400 million on a gross basis and $152 million net, or approximately 15% growth. Total investments at their current fair market value were $1.049 billion at December 31, 2011, compared to $880 million at December 31, 2010.

Our leverage increased from 0.24 times to 0.49 times during the year and funds were provided by additional borrowings under our revolving credit facility.

Portfolio growth continues to be one of our primary areas of focus at BlackRock Kelso. We remain under-leveraged and have plenty of debt capacity available under our bank credit facility to support our near-term growth goals. The borrowing cost under our revolving credit facility is our lowest overall cost of capital.

We continue to utilize our established sourcing model and high credit underwriting standards to structure sound investments in middle market companies, and we remain pleased with the investment opportunities that have resulted from our strong relationships in the middle market.

More specifically, with respect to investment capacity to support this growth, total debt stood at $343 million at December 31st. And in addition, we had cash and cash equivalents on our balance sheet of $7.8 million for net debt of $335 million.

Our balance sheet provides us with significant capital resources available for new investments. At December 31, 2011, we had $207 million available under our credit facilities and $352 million of statutory availability under the BDC leverage rules.

Our balance sheet remains under-leveraged, affording us the opportunity to raise NII without raising additional capital. Over the next several quarters, we expect that we will be able to continue to grow our total assets by using our currently available loan facilities to make new investments.

Our desire to grow our portfolio continues to be tempered by prudence and restraint, investing only in transactions with appropriate risk adjusted returns. Growth for growth's sake alone is not the hallmark of our approach. Market conditions remain somewhat volatile, dominated by macro factors as well as general economic conditions. Frequent changes in market liquidity have further reinforced our strategy of remaining conservatively positioned.

We continue to focus our attention on dividend coverage. For the quarter, we had net investment income of $0.27 a share on an adjusted basis, slightly ahead of our third quarter adjusted results. And yesterday, our Board of Directors declared a regular dividend of $0.26 per share on April 3rd, 2012, to stockholders of record at the close of business on March 20, 2012.

For 2011, net investment income totaled $1 per share. When taken together with approximately $0.12 per share of carry-forward income at the beginning of 2011, we have had a year-to-date net investment income that has exceeded our dividends. Since adjusting our dividend to $0.26 a share at the end of the first quarter, net investment income has exceeded dividend payments by approximately $0.02 a share.

So far, 2012 seems to be a bit of an echo of 2011, which got off to a slower than expected start. The domestic economy continues to improve, particularly for middle market companies, but some macro headwinds persist.

We are optimistic that deal flow will increase, surpassing 2011. This choppy environment tends to benefit BlackRock Kelso Capital as relationship transactions and incumbency are of greater value than in very hot markets. Mike will now discuss our portfolio activity and market conditions in more detail.

Thank you, Jim. Good afternoon, and thanks for joining our call today. I'm pleased to have the opportunity to talk about some of our financial results and to discuss how market conditions affect our portfolio strategy. In advance of this conference call, we posted to our website our year-end investor presentation. For those of you that have access to our website, the financial section of our presentation starts on page nine.

With respect to the quarterly portfolio details, total investment income was $36 million for the fourth quarter, compared with $33.2 million for the quarter ended September 30th. Net investment income totaled $0.15 per share, compared with $0.29 per share in the third quarter. Had our incentive fees been accrued ratably throughout the year, rather than heavily weighted toward the fourth quarter, as required under GAAP, our net investment income would have been $0.27 in the fourth quarter, compared with $0.25 for the third quarter as adjusted.

As Jim mentioned, since adjusting our dividend to $0.26 per share at the end of the first quarter, net investment income has exceeded dividend payments by approximately $0.02 per share. Adjusted to remove the effects of capital structuring fees, consent fees, prepayment fees and other fees in each quarter, our investment income for the fourth quarter was $30.6 million, up from $28.1 million in the third quarter. This increase is the result of a larger portfolio and higher weighted average yields.

Total investments at their current cost basis were $1.1 billion at year end, compared to $1.05 billion on September 30th and just under $1 billion at the end of the second quarter. Total expenses for 2011 were $58.6 million, versus $45.7 million the prior year. Of these totals, for the year ended December 31, 2011, $11.9 million of incentive management fees were incurred, versus $15.1 million for 2010.

Base management fees were slightly higher in 2011, equating to $19.8 million compared to $16.9 million for 2010. The greatest contributing factor to the overall increase in our expenses in 2011 was interest expense. For 2011, $16.6 million was related to interest and credit facility expenses, versus $6.2 million for the prior year. The increase in interest expense for 2011 was due to the issuance of $175 million in aggregate principal amount of our senior secured notes back in January, as well as higher overall levels of borrowing in 2011.

In total, we invested $141 million during the fourth quarter. We made three new portfolio company investments, which totaled $87.5 million of par value. In addition, we made an investment in a new financing for an existing portfolio company equal to $43.6 million, as well as several investments across existing securities in existing portfolio companies. All of our new portfolio company investments in the quarter were made in senior secured loans. Generally speaking, in volatile market conditions, we believe that a focus on senior positions in portfolio companies remains the most prudent use of our capital.

Investments in new portfolio companies during the fourth quarter included $20 million in a senior secured second lien loan of Renaissance Learning, $25 million in a senior secured first lien loan of Grocery Outlet, and $42.5 million in the Dial Global senior secured second lien term loan. Each of these new investments is floating rate and contains Libor floor arrangements as well as call protection. In addition, each new investment was subject to either a closing fee payable to BlackRock Kelso or was issued with an original issued discount to par.

In addition, during the fourth quarter, we made a new investment in AmQuip Crane Rental. As part of the transaction, our exposure increased from $24 million in the prior loan to $43.6 million in the current deal. The transaction resulted in the replacement of what had been Libor plus 5 3/4 coupon with a 12% current coupon. We also earned transaction and structuring fees related to the financing.

We also added $5 million to our investment in a second lien term loan of Progressive Financial under a previous commitment. Investments in existing securities of other existing portfolio companies were principally a series of opportunistic secondary market purchases at discounts.

At the end of 2011, approximately 80% of the investments in our portfolio were in transactions where we played a sole or shared lead role in the structuring of the securities. Portfolio rotation into higher yielding assets with Libor floors or fixed rates continues to increase our weighted average portfolio yields. During the fourth quarter, our new investments generally have expected all in returns, including fees and discounts, of more than 12%.

Also contributing to the higher average portfolio yields is the effect of our portfolio company exits. The $86.1 million of repayments during the fourth quarter were on securities with a weighted average coupon of less than 10%. The weighted average yields of the debt and income producing equity securities in our portfolio at their current cost basis was 11.9% at year end 2011, 10.9% at year end 2010. This 1% increase in weighted average rates on a cost basis generates approximately $0.14 per share per year of additional gross investment income relative to where we were at year-end 2010.

Looking forward to 2012, this higher level of interest income provides better visibility with respect to our expected investment income. As we have worked to position the portfolio for the current economic environment, the percentage of our portfolio comprised of senior loans and notes has increased from 60% of the portfolio at the end of last year to approximately 73% today. At year-end 2011, the balance of our portfolio was 16% invested in unsecured or subordinated debt securities and 11% invested in equity securities.

Jim mentioned strengthening domestic economic conditions. This serves as a positive backdrop for our portfolio companies, and we continue to be pleased with our overall performance. Non-accruals remain low. Currently, one-half of 1% of our total portfolio at fair market value, corresponding to 0.8% of our total portfolio at cost, is held on non-accrual. And the weighted average rating of our portfolio companies at year end was 1.20.

This is a significant improvement over the course of the year due to improving economic conditions generally, as well as the credit accretive effects of some portfolio rotation into a higher percentage of credits that were structured post the financial crisis. Fourth quarter saw a slight increase in portfolio company valuations to 95.5% of cost from 94.6% of cost at the end of third quarter.

Since year-end 2011, we've experienced some portfolio repayments which have contributed to a slight net reduction in our overall portfolio so far this quarter. We do not expect any significant additional portfolio repayments in the first quarter, although we have identified at least one asset that we expect to be refinanced in the second quarter. Given our current investment pipeline, our expectation is for a relatively flat quarter overall for net investment. With that, I would now like to turn the call over to Corinne to review some of the GAAP financial information for the quarter and the year.

Thanks, Mike, and hello, everyone. I will now take a few moments to review some of the details of our fourth quarter 2011 financial information. In comparing the fourth quarter with the previous three months, our total investment income increased approximately $2.7 million to $36 million or $0.49 per share. The increase in investment income for the three months ended December 31, 2011, is primarily attributable to higher average rates and fees on an overall larger average portfolio during the quarter.

Fee income earned for capital structuring during the fourth quarter was $3.1 million, relative to approximately $3.6 million during the third quarter. Net investment income totaled $11.3 million and $72.9 million, or $0.15 per share, and $1 per share respectively for the three-month and year-ended December 31, 2011. For 2010, net investment income totaled $59.9 million, or $0.96 per share. The net increase for 2011 period is primarily a result of an increase in interest income and other fees, partially offset by an increase in interest in credit facility related expenses.

In 2011, we were able to recognize capital losses on self-originated loans that served to reduce our ordinary income for tax purposes. As a result, our $1.10 of 2011 dividends generated taxable income of only $0.55 per share during the period. At December 31, 2011, we were in compliance with regulatory coverage requirements with an asset coverage ratio of 101% and were in compliance with all financial covenants under our debt agreement.

During the three months and year ended December 31, 2011, we purchased a total of 63,828 and 463,828 common stock in the open market for $0.5 million and $4.1 million respectively, equating to an average price of $8 per share during the fourth quarter.

During 2011, BlackRock Kelso Capital had a net appreciation on our portfolio investments of approximately $4 million. On a per-share basis, however, net asset value was $9.58 at December 31, 2011, down slightly from $9.62 per share at the year ended 2010.

The decrease of $0.04 per share was primarily due to the distribution of $1.10 per share, which included $0.12 per share of carry-forward income distributed in Q1 2011. This was offset by NII per share of $1 and $0.05 of net appreciation, further offset by $0.01 due to purchases of treasury stock, net of dividend reinvestment. With that, I would like to turn the call back to Jim.

Thanks, Corinne. We are all proud of our fourth quarter and the 2011 full-year performance. As we look into 2012, we are optimistic about our current position. We entered 2012 with a significantly higher interest income run rate than we had at the beginning of 2011, and we expect it to increase during the year. We are focused on continued prudent portfolio growth, adhering to our conservative investment philosophy, focused on preservation of capital.

We remain disciplined in seeking out-size returns without taking inappropriate risks. We continue to put money to work at higher yields in well-structured transactions as the year progresses. Overall, our pipeline opportunities remain solid, which will allow us to stay disciplined.

On behalf of Mike, Corinne, Larry and myself, I'd like to take this opportunity to thank our investment team for all their efforts and to thank you all for your time and attention today. Ashley, will you now open the call for questions?

(Operator instructions)

Our first question comes from the line of Jonathan Bock with Wells Fargo.

Good afternoon. I apologize if I missed it. But with BDC investors beginning to focus more on recurring revenue, can you give us some color on the percentage of nonrecurring revenues included into interest income this quarter?

Sure. Hey, Jonathan, it's Mike. What we mentioned earlier in the prepared part of the remarks was that total investment income for the quarter was $36 million. All right. So that's the starting point, including everything.

When you back out capital structuring fees, prepayment fees and consent fees, right, which we could have a further discussion about the extent to which they are recurring, because they're not recurring for any one investment, but they do tend to recur across the portfolio on a pretty regular basis. When you back those out, you back out just about, it's about $4.5 million, $5 million of total fee during the quarter. And that net number is $30.6 million, I believe.

Okay. Now, when we talk about the dividend policy, is that dividend policy set with a certain expectation of fees? And I guess maybe said another way, if that's the case, can you give us a sense of what those expectations might look like?

Well, I mean, I think, backing up to when we set the dividend at $0.26, we said at that point in time that it was our expectation that we would be able to cover that with interest income fees. And when we look forward to the average turnover in our portfolio, the underlying base interest income that we have on the existing portfolio, and I guess all I can tell you is we got it right, we got it a little better than right for the last three quarters, and we would expect to continue to do that in the future.

Okay, great. Staying with the dividend for a moment, could you tell us what leverage level is needed to fully cover the dividend from, we'll call it, stable NOI, maybe ex fees?

Sure. I think the answer to that is that there's not a specific numeric answer, because it's a multivariable equation. What comes into the portfolio and at what rates, and what comes out of the portfolio and at what rates go into that as much as to what extent the leverage is being utilized.

However, as a general rule of thumb, we are currently at 0.5 to 1 leverage, as we said, which is up from less than 0.25, or less than a quarter leverage at the beginning of the year. Our leverage continues to increase quarter over quarter. We would expect that over the longer run to continue. But we do not need to get leverage to an unreasonable level, a too-high, risky level to generate sufficient current income to cover the dividend, as we have done all year long.

I think as Mike said, it's sort of a multidimensional problem, and if we were to stay at the exact same level in terms of assets for the first quarter, depending on the amount of fee income we have, obviously, we think we'll cover -- we think we'll cover the dividend.

And that's been our experience to date, and we don't -- we expect that to continue. And that's effectively at close to 0.5 leverage. So answering it on a different way would be to take the leverage up and not have any transactions and have no fees, and that's not what's likely to happen. We're not going to take the leverage up without having fees, as a practical matter.

Okay. Now, looking at the stock trading slightly above NAV, under what circumstances would you consider raising equity and, also, would you consider a raise below NAV on a net basis because I do believe you have approval to do so.

We have had approval, and we never have raised equity below net asset value. As we look forward into 2012, we certainly have enough debt capacity that exists at the moment, and then we have enough freeboard under the BDC statutory coverage to have substantially more leverage. So I think it's fair to say that before we raise equity, it would be my expectation that we wouldn't -- that we would use up our current debt capacity, our current revolver before we raised equity.

Okay, guys. Thank you so much.

Our next question comes from the line of Arren Cyganovich with EverCore.

Maybe if you could just talk a little bit about the competitive environment and touch on pricing levels and leverage on new opportunities. One of your peers recently was indicating it was getting a little bit more frothy out there and taking a little bit more of a cautious stance. What are you seeing in the market right now?

Sure. I think the competitive environment has been pretty stable for some period of time. There certainly are other BDCs, but that's really just the tip of the iceberg. Depending on the transaction and depending upon the borrower or the situation, we're always participating in transactions under the premise that somebody else would be interested to do the deal.

So we price everything that we do competitively. We try to behave aggressively and deliver a good value to the people with whom we do business and provide that capital efficiently.

Having said that, since the financial crisis, which is now we're getting sort of three and four years past it, there's just been a very different environment for the type of lending that we do. And we think it's an environment that favors us. It has favored us and should continue to favor us for the medium to long term.

Each transaction is different. Each situation is different. Each competitive set is different. We do not generally participate in broadly available liquid market transactions. In that arena, there has been a bit of a surge in kind of the public high yield syndicated bank loan market over the last period of time.

To the extent that from time to time we are engaged in that market, that opportunity is less robust for us today. But certainly, that is never the majority of our business. And the fundamental one-off, non-liquid negotiated transactions that are sort of our bread and butter continue to be there for us.

We can always find something to do. The question is whether that something to do is something that we're willing to take a credit risk bet on. We see a lot, and that helps us be pretty choosy. When we're being choosy, even if it results in slower investment pace, we think that's the prudent long-term thing to do. At the moment, though, the environment's pretty good.

That's helpful. And you mentioned that the net investment activity in the first quarter, you currently expect that to be kind of flat. Did you happen to mention what the current year-to-date investment totals have been?

I did not, but it's safe to say that quarter to date has been, I think I said slightly negative. And that our expectation for this quarter is to be right around flat, give or take. Obviously, you can't tell at this moment in time on March the 1st what the next 30 days will look like. But we have a pretty good visibility with respect to payments. We don't see anything near term, although I did mention we expect one repayment that we're aware of to come in the second quarter.

The real question is just timing of closing. And as you know and as everybody else that you speak with tells you, remains a lumpy business. Timing is difficult. We work on lots of things. When we get into a new situation and begin doing due diligence and negotiating a transaction, it's with the expectation that we will make an investment, but doesn't always happen. And so all we can do is keep trying. Many of those deals over time will happen. Just always hard to tell when. Long story short, we expect a pretty flat quarter for total portfolio.

Thank you.

Our next question comes from the line of Rick Shane with JPMorgan.

Hey, guys. Thanks for taking my questions this afternoon. We talked a little bit about fees and recurring versus non-recurring running through the P&L. One thing that we did see was the decline in dividend income and also the runoff in some preferred equity investments. I assume that that's directly related. Is there anything from a seasonality perspective? Were there any sort of semi-annual dividends that we may see return in the first quarter this year?

Generally speaking, no. For almost anything that's on a longer dated pay schedule, we would typically accrue that pretty ratably, depending on the specific terms of the deal. So there's nothing unusual that we are expecting to occur in the first half with respect to timing of payments.

And so when we look at the dividend that you received and recognized this quarter, I just want to be super clear, I wasn't talking about dividends paid, but dividends received, that this is a reasonable run rate headed into 2012?

Yeah, I think, I mean, there is one -- I don't know how to best say this. I think that the dividend income is sort of the minority of the income that we receive. We have very little preferred equity on our books, generally speaking, as well as at the moment. Having said that, one transaction that an investment in which we had a preferred equity position through pretty much the end of the fourth quarter resolved itself during the fourth quarter. So the fourth quarter would -- going forward, relative to the fourth quarter, there is at least one fewer preferred equity investment that's on our books today than was there then.

Okay. Thanks. Second question, Mike and Jim, you guys kind of talked around this a little bit in the context of Jonathan's question, and I'd love to -- the question was asked largely in terms of what type of leverage to support dividend. And also, there was an answer related to continuing to lever up to basically enhance ROE at this point.

Mike, you made the comment talking about at some point leverage being too high. Would you just help us understand where you guys think that is? That way, as we're building our models out, we can think about proper timing for equity issuance, et cetera.

Well, you know, I think there's no clear answer to that, because part of the way that we think about it is based on visibility. And visibility includes what we have in-house and we think is going to -- we're going to invest in and also, obviously, it would include visibility as to repayments and probably repayments being -- visibility being the more important part of that equation.

We have, from time -- we never pinned the tail on the donkey here in terms of what the leverage level would be, appropriately, but I think if you think about 0.75, plus or minus, you're in the ballpark.

Yeah. I would, just to add on to Jim's comment, you know, for modeling purposes, models being imperfect, that would be a pretty good reference point to use for any sort of basic modeling exercise.

Okay, great. I think I agree with you in terms of the appropriate degree of leverage. You guys have been historically pretty conservative there. And obviously, you've seen where other folks have gotten in trouble. So I think those numbers make sense. Thank you.

And again, if you would like to ask a question, please press star then the number one on your telephone key pad.

Our next question comes from the line of Troy Ward with Stifel Nicolaus.

Thank you, and good afternoon. Just following up on Rick's question there about leverage, can you speak a little bit about how you view what type of leverage you want to see long-term on the balance sheet? We've seen a couple of BDC peers recently lock in some longer dated debt. I know you have some of that locked in. Is that something you would look to do and use the revolver less?

I think over time -- hi, Troy. I think that over time, we would expect to grow our total borrowing capacity more in longer dated than shorter dated types of liabilities. When we went out and we did what were at the time our five- and seven-year notes, it was with the point of view that ultimately, we would continue to do additional series of notes as the capital need presented itself to create something like a ladder of liabilities that better matched, over the long term, the tenor of the investments that we make.

Okay, great. And then going back a minute on the fee income that both Jonathan and Rick talked about, first of all, I want to thank you for providing some additional granularity on that. I think that's very helpful for us to understand where the different numbers are coming from.

But turning more to a competitive, on a competitive landscape, on slide 21 of your slide deck, you actually have, you know, the average up-front fees on new levered loans. They actually show an uptick in the last half of the year on up-front fees. Are you seeing that, and do you think that's a trend that will continue?

I think some of the information that -- I will start by saying that the information that's in the back of our investors presentation tends to track, as you know, it's generally provided by Standard & Poor's. It tends to track the leveraged loan market and their cut on the leveraged loan market for companies with less than $50 million of EBITDA when we talk about the middle market in here.

A lot of what we do isn't evidenced in that market. In other words, if Standard & Poor's is tracking it, more times than not, we're not participating in it. It's sort of the lower end of the liquid regular way, first lien kind of, for argument's sake, L plus 400 type of credit environment. We tend to be in more complicated, more structured, more due diligence oriented processes where we can have a relationship that will bring something to the table.

So that's the background on the data. Having said that, every deal's different that we do. And some deals that we do, you know, as I mentioned in the prepared remarks, all of the new investments that we invested in in the fourth quarter, for example, had either an up-front fee payable to us, a structuring fee, a capital structuring fee, some other type of front-end fee, or some kind of a discount, particularly with respect to the couple of secondary purchases that we did. And so we're generally finding that in the deals where we're participating, where we're structuring on that there is, in fact, a relative stability in the amount of fees that are paid on a percentage basis in our transactions.

Right. So I understand this is -- these are more syndicated and higher liquidity in this data. But what I was asking, is the trend similar? I mean, magnitude may not be the same, but do you think the trends are going to be similar in your market?

They don't follow directly.

Okay.

They don't follow directly. Perhaps there's less volatility in our fees and pricing. There's less beta in them. They don't move around as frequently and as rapidly and as much as they do in the syndicated loan market. But obviously, there is what I would describe as echo effect. If a very high fee environment persists for a long time, we could likely charge more in our transactions, and the reverse would be true as well.

Okay, great. And then just a couple questions on the portfolios. First of all, on AGY, mid-quarter, we saw some information that that company could be going -- trading kind of weak and may be a potential restructuring is in the works. Has there been any news on AGY since the end of the year that may impact your mark on that investment?

There hasn't been anything that we are aware of or would be able to talk to you about, other than what you've seen in the press.

Well, is --

What we might -- some color on that might be that this is a very tightly held issue, very few holders, very large holders, and so a lot of the noise around the name, prices, commentary may speak to a very, very illiquid and perhaps not traded market.

Okay. Understood. And then the last one, on Westward [Dough], I'm sure you probably walked me through this before. But you have two pieces, an A piece and a B piece. And the B piece has been on non-accrual for some time. But the A piece is actually marked at less than par. I mean, it's showing a greater deterioration from par. Can you just tell me kind of what the metric is going on there?

Westward Dough is a funny one. It's an investment that we originally made, gosh, I guess it's more than five years ago now. The company has been something we've been actively working on, working with and restructuring for some period of time and so my general comment would be that period to period, there hasn't been any significant change in the operations of the business, although period to period, we do make two steps forward, one step back with respect to our process of that restructuring. And perhaps our third party evaluation firm, who obviously has all of the information, takes that into account when they prepare their valuations.

Okay. Great. Thanks, guys.

And there are no further questions in the queue at this time.

All right. Well, thank you all again for participating. And as I normally say, if you have further questions, please give us a call. We're here to help you out. Thank you.

Thank you, ladies and gentlemen. This does conclude today's BlackRock Kelso Capital Corporation investment teleconference. You may now disconnect.