BLACKROCK CAPITAL INVESTMENT CORP: Regulation FD Disclosure (Form 8-K)

SECTION 7.01. REGULATION FD DISCLOSURE.

BlackRock Advisors, LLC (“BlackRock Advisors“) began to serve as the investment manager of BlackRock Capital Investment Corporation (the “Company”) on March 6, 2015, the date on which the Advisor acquired certain assets of the Company’s former investment advisor (the “Acquisition Date”). On January 16, 2018,
BlackRock Advisors transferred its management contract with the Company to a wholly-owned subsidiary, BlackRock Capital Investment Advisors, LLC (together with BlackRock Advisors, the “Advisor”) in accordance with Rule 2a-6 of the Investment Company Act of 1940. There have been no changes in the commissions paid under the management agreement, nor in the personnel overseeing the provision of services investment management to the Company. For the Advisor’s non-company marketing purposes, the Advisor has calculated the implied IRRs (internal rates of return) for the portion of the Company’s portfolio that was invested on or after the acquisition date. These implied IRRs have been calculated gross of all fees and expenses, as well as net of applicable fees (defined below). Accordingly, we provide the information below. The calculation covers a period (the “Calculation Period”) beginning on the Acquisition Date and ending on March 31, 2022 (the “Computation End Date”).

The implied IRR calculations include the performance of all new funds invested during the calculation period. For those investments exited during the Calculation Period, all actual cash inflows and outflows during the Calculation Period that were attributable to the investment were used to calculate the implied IRRs. For all other investments of this type, the implied IRRs were calculated (i) using all actual cash inflows and outflows during the calculation period that were attributable to the investment and (ii) assuming that the fair market value of the investment, plus accrued liabilities but unpaid interest at the calculation end date were realized in cash at that date. For the Calculation Period, these implied IRRs were 9.2% on a gross basis and 6.4% on a net basis, based on $1.72 billion of cash invested in 231 different investments in 134 companies, of which 69 investments in 47 companies were abandoned during the calculation period. For the calculation period, the implied IRRs on these 69 abandoned investments were 10.5% on a gross basis and 7.7% on a net basis based on
$901 million of cash invested. The implied IRRs for the remaining 162 investments in 87 companies were 6.9% on a gross basis and 4.0% on a net basis based on $818 million of cash invested.

The internal rate of return is the discount rate that makes the net present value of all cash flows associated with a particular investment equal to zero. Investments are considered abandoned when the original investment objective has been achieved by the receipt of cash and/or non-cash consideration on the sale, redemption or other disposal of an investment or by the determination that no other consideration was recoverable and, therefore, a loss may have been realized.

Implied IRRs on a gross basis are calculated using cash flows gross of any fees, costs or expenses incurred by the Company. Implied IRRs on a net basis are calculated using cash flows net of applicable fees. “Applicable Fees” means management fees, revenue-based incentive fee (prior to giving effect to any waiver of fees in the last fiscal quarter) and operating expenses (excluding management, revenue-based incentive fee, capital gains and leverage-based incentive fee, including interest, credit facility fees and other debt-related charges), respectively , incurred by the Company during the last fiscal quarter (Q1 2022) expressed as a percentage of the Company’s total investments, at fair market value, at the end of the fourth quarter of 2021. For the purpose of calculating the implied IRR on a net, all applicable fees are annualized. The applicable Charges are applied to the total capital invested throughout the Calculation Period for the purpose of calculating the net implicit IRR. The net implicit IRR is calculated on the basis of the gross assets of the Company. The applicable fees do not include leverage expenses and are expressed as a percentage of the company’s total invested capital (instead of being expressed as a percentage of the company’s net assets, as the expenses are generally expressed in the company’s consolidated financial statements).

Applicable fees are calculated for the advisor’s non-company marketing purposes only. Investors should not rely on the gross or net implied IRRs shown above as a measure of the performance of the Company or its portfolio. There is no guarantee that the assumptions of costs and expenses used for these calculations will be representative of the costs and expenses incurred by the Company.

The implied IRRs shown above only reflect the performance of new funds invested during the Calculation Period and not the performance of the Company’s entire investment portfolio over a given period. We would expect these implied IRRs for the entire investment portfolio to be lower than the implied IRRs shown here. Investors should not rely on the implied IRRs set forth above as a measure of the performance of the Company or its portfolio, as they do not represent the returns experienced by an owner of common stock in the Company. Actual returns to a common shareholder are subject to higher expense ratios when expenses are expressed as a percentage of the Company’s net assets and leverage expenses are included. There can be no assurance that these implied IRRs could be generated in the future for any investment.

Information disclosed pursuant to this Section 7.01 is furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference in any filing made pursuant to the Securities Act of 1933. , except as expressly provided by specific reference in such filing.

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